Getting Approved For A Credit Card with Bad Credit In Australia

Alfred Erickson Garcia

Owning a credit card is a two way street of financial decisions. Credit cards are a great way to build and improve your credit score. On the other hand, irresponsible decisions can put you financial trouble which can result in bad credit. If you find yourself going down the wrong path, it’s never too late to improve your credit score.

What Happens When You Have Bad Credit?

An applicant’s credit score is evaluated by two credit reporting companies, Equifax and Experian. Your Equifax score will range from 0-1200, a score between 0 and 509 will be considered below average, You Experian score will range from 0-1000, a score between 0 and 549 will be considered below average. Along with your credit score, there are many factors that credit card companies consider in order to be approved. Other factors may include your credit history, individual annual income, outstanding debt, and repayment history, If you have a credit history that shows missed payments and a significant amount of outstanding debt, your credit score will be scorer below average.

Unfortunately, having bad credit can hinder you from being approved from future credit card applications and loans. It’s important to know what affects your credit score to avoid the path of debt and bad credit. In Australia, it’s very difficult to be approved for a credit card with bad credit. Due to the amount of debt consumers have accrued in Australia, the ASIC (Australian Securities and Investments Commission) has made it difficult for lenders to approve applicants for credit cards and increased credit limits. If you categorize as a consumer with bad credit, there are other options you can explore to improve your credit score.

Instant Approval Credit Card

The current credit debt situation in Australia allows consumers minimal options. A secured credit card is an option that requires applicants to deposit money into the bank as collateral. Unfortunately, this type of credit card is not available in Australia. There are currently two options that are recommended for those who have bad credit.

The first option is applying for an instant approval credit card. An instant approval credit card is an alternative option but not all applicants are approved. Anyone can apply online and should expect a response within 60 seconds. Since the approval process is automated, there’s no room for negotiation, especially if you have bad credit. A credit check is involved during the approval process, along with specific criteria such as income, employment, and repayment history. While this may be an option, applicant should be aware that they will most likely be approved with a higher interest rate with lower credit limit.

Improve Your Credit Score

The other option for someone who has bad credit is to work on rebuilding and improving their credit score. If you’re already in debt, sometimes the best solution is to create a plan to repay all outstanding debt before applying for your next credit card. If you have a low credit score, there are simple actions you can apply today to get you back on track to rebuilding your credit score.

  1. Request your credit score and credit report. It’s important to know you’re financial position in order to create plan.

  2. If there is any incorrect information on your credit report, you can request for them to be removed. You may have listings on your report that have been resolved in the past and need to be removed.

  3. Identify listings on your credit report that you can resolve quickly. If you have any overdue payments, its best to repay them within 60 days or it will be considered a default that will reflect on your history for 5 years.

  4. Identify listings on your credit report that may be difficult for you to resolve. Discussing a new repayment plan can be considered by the creditor.

  5. Constantly monitor your credit score to ensure incorrect listings do not appear and to stay on track with your plan to rebuild your credit score.

Having a low credit score should stop you from applying for your next credit card or even working to improve it. If you plan on applying for an instant approval credit card, understand that a low credit score will results in high interest rates and lower credit limit.

Resources:

1. https://www.finder.com.au/equifax-score
2. https://www.creditcard.com.au/guaranteed-approval-for-credit-cards/
3. https://www.mybusiness.com.au/finance/4598-credit-cards-could-become-more-difficult-to-obtain

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