Loans For Bad Credit Ratings – What Are They?

If you have found yourself struggling with cash and your credit score, loans for bad credit ratings may be able to help. We get it – sometimes you need access to fast loans without deep scrutiny towards your credit report. The good news is that small loans may be attainable to you regardless of your credit score.

But what does a good credit rating look like? And how can you redeem a bad credit score? These are common questions. Understanding credit and how it can work to your advantage is the first step towards rejuvenating your credit report. Hence, today Monzi will be discussing all things cash loans and credit ratings.

Please note that specific ideas and products presented in this article may not be on offer by Monzi or the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What is a credit rating?

Before discussing what makes a credit rating bad, you’ll need to know what a credit rating is. A credit score is a numerical value between zero and 1,000 or 1,200, depending on which bureau generates your report. This value is a numerical representation of your credit report, a compilation of information about your financial habits.

Simply speaking, if you have been repaying your existing loans or credit cards promptly and meeting various other positive criteria, your score will go up. If, however, you have been failing to repay debts and applying for credit too frequently, your score may tank.

There are five credit bands that your report can fall into. Whilst different credit bureaus use different scales, these bands are generally: below average, average, good, very good, and excellent.

What is a bad credit rating?

Most people have some idea of the concept of loans, but what about credit ratings? If you seek loans for bad credit ratings, you may have made some questionable or unfortunate financial decisions in the past. Generally, however, your credit rating is considered ‘bad’ if your score is below the ‘good’ band.

Typically, a bad credit rating signals to potential lenders that you are irresponsible with your finances and aren’t trustworthy with their credit. However, Monzi knows that this isn’t always the case. We’re all human, and sometimes a lack of understanding or a challenging situation can cause a bad credit rating. So, when big banks turn you down, it may still be possible for you to get private loans, even if you have poor credit.

Why would you need this type of loan?

Potential borrowers often start looking for loans with bad credit ratings when they need someone to take a chance on them. If you need to get an expense sorted and avoid strict bank criteria, there is still hope. Particularly in the form of no credit check loans.

Loans for bad credit ratings may not be significant. Meaning that if your report isn’t looking good, it is unlikely that you’ll be able to purchase a home. However, you may be able to receive approval for small cash loans that can help fix a problem around the house or cover a bill that needs paying.

If you do have poor credit and are desperate for cash, you should first consider whether a loan might further damage your situation in the long run. There are several other ways to get access to money before taking a loan. The Australian Government’s Moneysmart site has an excellent page on urgent help with money if it is an emergency. Start here before looking into borrowing credit.

What is the easiest type of loan to get with bad credit?

How easy it is to obtain loans for bad credit ratings depends on a couple of factors.

  1. How much are you looking to borrow? The smaller the amount, the larger your approval chances may be.
  2. Who are you borrowing from? Some lenders are more sympathetic to bad credit than others.
  3. What type of loan are you chasing? A mortgage loan may be unattainable.

Generally, however, loans for bad credit ratings through private lenders are the easiest to receive approval for. Typically these loans are either personal loans or payday loans. This is because the big banks need to be stricter with their lending and want more proof that you will be responsible. Private lenders, however, can manage themselves and may be more willing to understand your situation than a financial institution lender.

Monzi is a lender-finder with a network of private lenders that might be able to help if this is your position. We can’t speak on behalf of all the lenders we work with and their terms, as they vary by individual. However, we can say that Monzi lenders may be more willing to overlook bad credit ratings than the standard lender. If you think this could be helpful, why not start an application with us? We’ll do our best to try and match you to a lender who might be able to help!

Are loans bad for your credit rating?

Whether or not loans are bad for your credit rating depends on how you manage them. If you are responsible and make your repayments on time, your score could reflect this. However, if you don’t put in the effort and become blase with your repayments, your score could likely fall. Loans for bad credit ratings can either improve your situation or make it far worse. Meaning that if you know that you can’t correctly manage a loan with bad credit, you should avoid them.

However, it’s not only loan approval that could hurt your credit report. Multiple credit applications will list, potentially lowering your score. This means that if you continuously make loan applications only to be repeatedly turned down, you’ll be hurting yourself. The applications listed on your report show potential future lenders that you have already been turned down multiple times. This may set off the alarm bells for a prospective lender, meaning you should be cautious of how frequently you apply.

How do you use a loan to your advantage?

As above, you can use loans for bad credit ratings to improve your credit score. You will need to be strategic and responsible to do so, however. It may be wise to take a relatively small loan to start with if you already have poor credit. This is as you are more likely to receive approval with a decreased likelihood of getting into debt.

Private lenders in the Monzi network may be more likely to listen to your story and understand what you are trying to achieve. If a lender can see that you have made some past mistakes but are working to lift your credit score, this may help your application. Alternatively, volunteering to secure your loan with an asset may help gain your lender’s trust and boost your approval chances. Regardless, if you successfully attain a loan, ensure that you keep on top of it until you have made all your repayments. This is likely to aid with your credit rating and help you to obtain larger loans in future.

High interest-rate loans for bad credit

If you are taking personal loans for bad credit ratings, you will likely encounter higher interest rates. This is because private lenders are often taking a higher risk by lending to you. Therefore charging higher rates will ensure they have made some of their money back if you fail with your repayments.

These high interest rates, particularly with loans such as payday loans online, have attained a negative reputation. This is because some borrowers may be unprepared for exactly how much the loan may cost them in the long run. Failing to add the cost of interest to your budget when borrowing can potentially generate debt cycles for ill-equipped borrowers.

You can avoid this, however. Before you borrow anything, visit a personal loan repayment calculator and input the loan details. This will tell you exactly how much you should pay each month and the total loan value. Also, keep in mind that your lender cannot lend to you by law if they do not believe you can repay. The combination of the law and your research can protect you from putting yourself into further debt.

Can you buy a house with bad credit?

Generally, you won’t be able to take home loans with bad credit ratings. It isn’t impossible. However, it is pretty rare to receive approval for enough money for a home without at least a good credit rating. There are, however, several factors that a lender will look at when assessing your application. These include your employment, your income and expenses, and how much of a deposit you have.

If the rest of these factors are appropriate for the mortgage you seek, there is potential for approval. However, if you have a below-average credit score Australia, it is unlikely a lender will approve you for hundreds of thousands of dollars.

Bad credit home loans are usually only offered by specific lenders, considered non-conforming lenders. However, even if you could get approval, should you? If you were affected by the lack of job security in the pandemic and know your current position could be at risk in future, it may be wise to consider this. Also, consider that the interest rate is likely to be higher than it would be if you had good credit. Is it worth improving your score before applying for such a large loan?

Can bank loans work with bad credit?

It can be pretty uncommon to come across one of the major banks that will accept less than perfect credit. You may find some financial institutions that consider themselves alternative lenders who are more willing to help. However, if you are chasing loans with bad credit ratings, private lenders are usually your best bet.

There are some private lenders with stricter terms. Although, if you can prove that you have a regular income, reasonable expenses and potentially a good asset for security, your lender might be more willing. Try to avoid immediately placing an application with a bank without reading their terms. This is as you may end up with too many applications on your credit report. Thereby hurting your chances.

Applying for loans for bad credit rating

Alternatives to loans when you’re in a tight spot

It is important to remember that if you are struggling, there is always help available. It may be wise to start by speaking to a financial advisor. You can potentially find free counselling help through the National Debt Helpline. If you create an efficient budget and find no available wiggle room for spending, look into Centrelink. Investigate what government grants, and help you may qualify for.

If you are still struggling, consider whether there is an interest-free loan option available. The government generally offers these loans to those who are desperate. If you attain one, you may avoid the risk of a standard small loan. It is also vital that you understand the difference between needs and wants. If you want money for a non-essential, it may be better to hold off and save.

Remember that if you are struggling with a current loan, there may be options available. Contact your lender the moment you hit a rough patch. They may be able to offer you repayment plans or freezes.

Can you improve your credit score?

Yes, to an extent, you can repair your credit score. If you decide to hold off from taking loans for bad credit ratings, this can work in your favour. The information on your credit score will remain for a certain period, depending on its severity. For example, your repayment history will stay on your report for two years. In comparison, a bankruptcy will display for five.

This means that if you weren’t prompt with your repayments, you have to wait two years before this will disappear. What you can do, in the meantime, is install positive behaviours that will help you work towards a better score. So that when your undesirable entries drop off, you will have hopefully risen by a reasonable amount of points. These behaviours can include paying off your debts, lowering your credit card limits using a credit card limit calculator, and disputing any file inaccuracies.

There are some ‘fix my credit’ style companies in circulation that can help you with this if you are unsure. However, note that some of the companies in circulation may be scams. Be wary of any business offering to wipe your report clean. This is not possible. Also, avoid any companies looking to charge you upfront. It isn’t certain that even a legitimate company will be able to help you.

Pensioners with bad credit rating

If you are a pensioner in need of some cash, you may be wondering if you can get loans for bad credit ratings. Monzi cannot give any definitive answer; however, it is not out of the question. Rather than speaking broadly, we can tell you what you will need to use our lender-finder. From there, it will be up to the decision of your lender as to whether you receive approval.

To use the Monzi lender-finder, you will need to show that you have at least three months worth of a regular income. This is so your lender can gauge whether you have the means to repay your loan. Some lenders may accept the pension or Centrelink as a regular income. However, this can only happen if you can show that you can still support yourself and repay a loan.

As a good loan alternative, if you are on Centrelink, you may be able to request a cash advance to tie you over.

Used car loan with bad credit

You may be able to attain car loans with bad credit ratings in some circumstances. Again, it will depend on how much you are looking to borrow and who your lender is. However, for specific car loans, you may be able to improve your chances by securing the loan against the car you intend to purchase. This means that if anything goes wrong, the bank can repossess this vehicle to repay your loan.

However, you don’t have to take a specific car loan to afford a vehicle. Personal loans are incredibly versatile, and you can take one to purchase a car. Not only will this make the approval process more straightforward, but it will also mean you are more likely to be considered with bad credit. Likely, you will still need to secure your loan. With Monzi lenders, you can expect any loan you take over $2,000 to require collateral. Naturally, this may vary by lender. However, you should be prepared to provide some form of security with your loan.

Quick loans for bad credit ratings

If you are chasing loans for bad credit ratings, likely, you are also after quick loans now. So, if you do attain approval, how quickly can you expect to have the money in your account? Not every lender functions the same. However, it can be possible to get same day cash loans in some circumstances.

If you are looking for same-day approval via the Monzi lender-finder, the time you apply will matter. You can only match with a lender during business hours. This means that if you place your application on Friday night, you may have to wait until Monday morning. However, if you apply at the beginning of a workday, we may be able to find you a lender in as little as 60 minutes. If we are successful, your lender will contact you. From there, if you sign their contract, the money can be on its way.

Perhaps, the only other thing that could stop you from receiving the cash on the same day is the bank transfer. Much like Monzi, most banks cannot process transfers outside of business hours. You may also have to be lenient for cross-bank transfers. However, in comparison to the standard loan, Monzi’s process can potentially be rapid.

How to apply for a loan?

How you apply for a loan will depend on the loan type and the lender. If you are seeking a home loan, the application process may be quite long. Although, if you are looking for loans with bad credit ratings through Monzi, the process couldn’t be more straightforward.

The Monzi process is only a few steps long and is 100% online and paperwork free. This means we remove the fuss of hunting down documents and driving to a branch to pass them along. If you are seeking a small loan, you are likely on the go and after fast money loans. We understand that which is why we are a lender-finder who wants to work with you, not against you.

Are there payday loans for bad credit ratings?

Yes. If you are seeking payday loans for bad credit ratings, it may be possible to attain one. This is not a loan that Monzi offers, as we work with lenders offering personal loans. However, if you feel stuck between paychecks and don’t have the best credit, this kind of loan could help.

Keep in mind that there can be other avenues before turning to a payday loan. Also, remember that a loan repayment calculator might be your ally when taking a high-interest loan such as this. Ensure you can afford to repay the loan plus interest before you sign the contract. Avoid digging yourself a bigger hole.

Payday loans vs personal loans

Whilst these two loan types do share similarities, they also have some key differences. It is these differences that can help you to decide which loan type may be right for you.

Payday loans

  • Generally have a term of 16 days to a year.
  • May only allow you access to up to $5,000
  • The interest rate can be manageable; however, the trade-off is usually more fees.

Personal loans

  • Generally have a term of two to seven years.
  • Depending on the lender may give you access to $10,000 or more.
  • Interest rates are usually steadier, however, can still be higher than other loan types.

Naturally, these are just a few of the identifying factors associated with each loan type. You must conduct your research first. Don’t forget to weigh up your options; loans are not one-size-fits-all.

How can you improve your approval chances?

Naturally, the better your credit score is, the more likely you are to receive approval. You can conduct credit repair Australia to a certain extent. However, this often won’t have an immediate effect. Secondly, you can provide collateral or a deposit that meets your lender’s requirements if you try for a mortgage.

Aside from these two things, the next best thing you can do is prepare for your application and be honest with your lender. Lenders tend to appreciate honesty, and if you can show them you are prepared and have all your documents compiled, this might do you favours. If you still think this isn’t going to work, your last option is to try and obtain no credit check loans.

Can you take a loan with no credit check?

Yes. Not all lenders will permit it. However, some lenders in the Monzi network may agree to skip the credit check when conducting your assessment. This then means that rather than assessing you on your credit report, your assessment is on your income, expenses and other essential details.

Please note that not every lender will permit a no credit check loan. However, this is not the end of the world. You can still take loans for bad credit ratings with a credit check. This is because Monzi lenders may be willing to see the big picture. Meaning that whilst they may want to look at your credit report, they will base their judgement on all the information you provide.

If you desperately need to avoid a credit check, you can always conclude business with the lender you match with and opt to match again. Please note that we cannot guarantee you will receive a different lender the second time around.

Monzi loans for bad credit ratings

The lenders in the Monzi network may be able to offer loans for bad credit ratings. This is not guaranteed. However, our lenders understand that life isn’t always smooth sailing. If you believe you are ready to give borrowing a shot, we’ll do our best to try and find a lender who may be able to help.

All you’ll need to do is begin your application, tell us a little about yourself, and then we’ll finish the job. If we’re successful in finding you a lender, they will be in touch soon after.

If you have some questions to get off your chest before applying, we’re happy to help. Reach out to our friendly team at We look forward to hearing from you.

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Factor In Costs

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000


12 months (minimum)

12 months (maximum)


20% upfront establishment fee

+ 4% monthly fee


Representative example based on a loan of $1000 over 6 months a borrower can expect to pay a total of $1440.

Disclaimer: Under the current legislation, all Small Amount Credit Contract loan providers don’t charge an annual interest rate. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The comparison rate on loans between $300 and $2000 could be up to 199.43%. The minimum loan term is 16 days and maximum loan term is 12 months. Representative example based on a loan of $1000 over 6 months a borrower can expect to pay a total of $1440. WARNING: This comparison rate is valid only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan.

Loan amount

$2,100 - $4,600


13 months (minimum)

24 months (maximum)


47.8% Annual Percentage Rate (APR)

65.85% Comparison Rate p.a.


Representative example based on a loan of $2500 over 24 months a borrower can expect to pay a total of $4,556.88.

The maximum interest rate for a Medium Amount Credit Contract is 47.8%. Comparison Rate 65.85% p.a. The maximum loan term is 24 months. Representative example based on a loan of $2500 over 24 months a borrower can expect to pay a total of $4,556.88. WARNING: This comparison rate is valid only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Credit criteria and terms and conditions apply.

Loan amount

$5,000 - $15,000


13 months (minimum)

24 months (maximum)


17% Annual Percentage Rate (APR)

36% Comparison Rate p.a.


Representative example based on a loan of $10,000 over 36 months a borrower can expect to pay a total of $16,489.

The starting interest rate for a Personal Loan is 17%. Comparison Rate 36% p.a. The maximum loan term is 24 months. Representative example based on a loan of $10,000 over 36 months a borrower can expect to pay a total of $16,489. WARNING: This comparison rate is valid only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Credit criteria and terms and conditions apply.