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88% of our customers have their funds within 60 seconds of signing their contract.*

*Only available for NPP enabled bank accounts

Fast Personal Loans

  • Smart and quick application form, which can be completed in minutes
  • 70% of applicants receive an outcome instantly
  • For applications that do not receive instant outcome, most receive a final outcome within 60 minutes!*
*During normal business hours.

Nifty’s Top 10 Tips for Loan Approval With a Bad Credit Score

Andy

Andrew Bell

Last updated: June 2, 2020

  • 5 min read

5 min read

You’ve got bad credit but you still want some extra cash? Let’s get Nifty! We will give you our top 10 tips for loan approval even if your credit score looks far from great. But there are a few things you can do to improve your credit report and get your loan approved more easily. Some of them need a bit of time and preparation while others can be done straight away. Applying for multiple loans may decrease your chance of approval over time. So be smart and only apply for a fast loan once the Nifty way.

Tips For Loan Approval

What you need to know about credit scores

Your credit score is a number that reflects your previous financial decisions based on your credit report. Banks and lenders refer to it when you submit a loan application to get an idea of your previous financial behaviour. Many lenders assess if they believe you will be able to repay your loan based on your previous behaviour (= credit score). However, a credit default or bankruptcy can be stored for up to 7 years even if you paid your debt off and moved on. Therefore, a bad financial decision from the past can affect your financial present and future.

A low credit score indicates to a lender that you may have struggled to repay your bills in the past, while a high credit score means that most likely you made your payments on time and kept a good relationship with money. In some cases, a low credit score can cause a lender to reject your application on the spot. If you want to avoid rejection, keep on reading!

Reasons why your loan gets rejected

Your loan may get rejected for various reasons. If that has happened to you already, you can always contact the lender to ask for the reason you got rejected for. Feedback may help your next application to be more successful. Here are a few very common reasons for why loan applications are rejected:

  • You have applied for too many loans in the past. Your credit report keeps track of any loan you have applied for in the last 5 years. Too many applications may give you a bad credit rating and get your next loan application rejected.
  • Insufficient or infrequent income. When assessing your financial situation, your potential lender will have a look at your income history. If they believe you won’t be able to repay your loan with your current income, your application will be rejected.
  • Your details are not correct. When checking your application, lenders will also verify your personal details and potentially call your job to ensure the given information is correct. If you typed in wrong information, your loan application may also be declined.
  • You have too many loans already. If you are holding multiple loans already, chances are high that another application won’t get through as a new one may not be affordable.
  • Your purpose may not be acceptable. Many lenders will ask you to give them a reason for your loan application. If your loan purpose is not credible or the loan you are applying for is bound to a certain purpose and you are not complying, your loan may get rejected.
  • Your assets are not valuable enough. If you apply for a secured loan, you will be asked to put an asset like a car or boat against your loan. If your asset is either too old or not valuable enough, your loan may also not get approved.

How to avoid getting your loan rejected

Obviously, if you have bad credit, you can’t avoid rejection from every single lender. Some may set the rule not to lend to anyone with bad credit and will reject you, no matter what you do. However, from July 2018, Australia has a new system called Comprehensive Credit Reporting (CCR). It also records positive financial behaviour which could be your key to getting accepted. By accumulating more positive listings on your credit report, you may outweigh the negatives.

Tip #1: Check your credit score.

It’s important that you are on top of your financial game by frequently checking your credit score. Make sure that you check thoroughly if the information is correct or if there is anything that needs to be addressed. Otherwise, a small mistake could cause your loan application to be rejected. You can get your credit report for free every 12 months and for a little fee any time you want.

Tip #2: Get any errors fixed.

If you happen to find any information that is stated incorrectly, you should immediately contact the company in charge. It can take a while until changes show up, therefore, you should make sure to address problems as early as possible.

Your credit reporting agency can fix any errors regarding your personal data, debt incorrectly being listed twice, or a debt amount that’s listed incorrectly.

Your credit provider can fix any mistakes regarding debts that you are in dispute about, that has been stated incorrectly, or that you didn’t receive a notice about.

Tip #3: Consider a credit card and use it.

It may sound contradictory at first, but having no debt at all doesn’t make you more creditworthy per se. Using your credit card and repaying your debt on time shows that you can handle money well and will be used as a positive example of payment behaviour.

Tip #4: Pay off debts.

Getting a loan or any sort of debt might lower your immediate credit rating. However, consistent repayments on time can have a positive impact on your payment rating. It doesn’t matter if you have any debt as long as you stay ahead of your repayments and make them in a timely manner.

Tip #5: Find out about requirements upfront.

Each lender has their own minimum requirements about income and credit scores. Finding out about them early in your application process will ensure that you are actually eligible to apply for a loan with the lender of your choice.

Tip #6: Check your budget.

Most lenders will thoroughly check your financial situation before they give you a loan. This is to ensure that loan repayments are affordable for your budget. If you know your budget upfront you can ensure that you apply for a repayment term that suits your income. Financial advisors suggest that you use no more than 40% of your take-home income for loan repayments.

Tip #7: Pay your bills on time.

Your comprehensive credit report does not include any of your utility bills, however, if you forget to pay your bills on time, your provider will report those unpaid bills to a debt collector and your credit reporting agency as a default. Therefore, you should make sure to pay your bills on time and avoid unnecessary listings.

Tip #8: Manage multiple types of credit.

If you show that you can manage multiple loan repayments at once, let’s say a car loan and a personal loan, your credit rating may improve through positive feedback. However, please make sure that you only get multiple loans if you actually need them and can afford to repay them comfortably.

Tip #9: Have a steady job history.

Changing jobs too often may give the impression that you are in a financially unstable position. A long-term employment history provides security for your lenders and leaves the impression that you are stable and financially safe. The chances to get a loan approved will rise if you have been in your current position for a longer period of time.

Tip #10: Consolidate your debt.

A debt consolidation loan can improve your finances by repaying your current debt and combining the repayments into a single one. You might get a better interest rate and repaying your old loans may improve your credit rating. However, give it a few months to show up in your report as getting a new loan may lower your rating short-term.

The Nifty way of lending

We believe that everyone deserves a fair go. While we do perform a credit check in our loan assessment, we won’t just look at your bad credit. We want to know about your current financial situation and spending habits. That’s why we can offer loans for people with bad credit. Our loans are Nifty and they live up to their name: Submit an easy online application and get your outcome within an hour. We’ve got your back, even if you have bad credit. If you want to learn more about our requirements, learn about how our loans work.

 


Andy Andy

AUTHORITATIVE SOURCE

Andrew Bell

Since founding Nifty in 2016, Bell has continued to make waves within the local financial sector for his continued ambition and willingness to adopt emerging technologies.

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Loan amount:$2,500
Terms:24 Months,
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Loan amounts:$300 - $2,000
Terms:6 - 9 months
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View Example

Small Loan Example

Loan amount:$1,000
Terms:6 Months,
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* Not applicable. Small loans do not charge an annual interest rate.

** WARNING: This comparison rate is true 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. Different loans may include other payable fees and charges. All fees and charges will always be displayed on your loan contract.

Loan Costs

Potted Plant

Small Loans

$300 - $2,000

Loan amounts:$300 - $2,000
Terms:6 - 9 months
Establishment fee:20%
Monthly Fee:4%
APR:N / A *
Comparison Rate:138.37%**
View Example

Small Loan Example

Loan amount:$1,000
Terms:6 Months,
(24 weekly repayments)
Establishment fee:$200
Total other fees:$240
Total payable:$1,440
Weekly installments:$60.00
View Loan Details
Growing Tree Medium Loans

Medium Loans

$2,001 - $4,600

Loan amounts:$2,001 - $4,600
Terms:9 - 24 months
Establishment fee:$400
Monthly Fee:$0
APR:47.8%
Comparison Rate:65.86%**
View Example

Medium Loan Example

Loan amount:$2,500
Terms:24 Months,
(104 weekly repayments)
Establishment fee:$400
Total other fees:$1,609.44 (reducing interest)
Total payable:$4,509.44
Weekly installments:$43.36
View Loan Details
Grown Tree Large Loans

Large Loans

$5,000

Loan amount:$5,000
Terms:9 - 24 months
Establishment fee:Variable
Monthly Fee:$0
APR:21.24%
Comparison Rate:48%**
View Example

Large Loan Example

Loan amounts:$5,000
Terms:18 months,
(78 weekly repayments)
Establishment fee and Total Interest:$1,897.54
Total payable:$6,897.54
Weekly installments:$88.43

* Not applicable. Small loans do not charge an annual interest rate.

** WARNING: This comparison rate is true 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. Different loans may include other payable fees and charges. All fees and charges will always be displayed on your loan contract.