Your credit score or rating is a numerical representation of the information on your credit report. It’s based on things like the amount of money you’ve borrowed, the number of credit applications you’ve made and your repayment history. It plays a significant role in a lender’s decision to approve your loan and the terms they’ll offer.

Credit score requirements for personal loans

Australia has three leading credit rating agencies: Experian, Equifax and illion.

Your credit score is between zero and 1,000 or zero and 1,200, depending on the issuing agency. This number sits on a scale broken down into excellent, very good, good, average and below-average categories. Basically, the higher the number, the safer you’re considered to be as a borrower.

While there isn’t a minimum credit score for personal loans that Australian lenders agree on, generally, you’ll need a “good” credit rating to qualify for a loan with traditional lenders.

	Equifax	Experian	illion
Below Average	0-459	0-549	1-299
Average	460-660	550-624	300-499
Good	661-734	625-699	500-699
Very Good	735-852	700-799	700-799
Excellent	853-1,200	800-1,000	800-1000

That said, there are alternative and online lenders ready to provide loans to those with less-than-perfect credit histories.

» MORE: How to improve your credit score

Other eligibility requirements

In addition to your credit rating, most lenders will have standard eligibility criteria. You’ll likely need to:

Be at least 18 years old.
Be an Australian citizen or permanent resident, or hold an eligible visa.
Have a fixed address in Australia.
Meet minimum income requirements.
Receive a regular source of employment income.

If you’re self-employed, you may have to satisfy different credit assessment requirements.

» MORE: What self-employed borrowers should know about low-doc home loans

Types of personal loans you can get with average credit

Here are some loan options you might consider if you have average credit:

Guarantor personal loan. Applying with the support of a guarantor can boost your chances of approval, provided your guarantor meets the standard eligibility and credit rating requirements and can show they can repay your loan if you can’t. What to know about guarantor home loans.
Secured personal loan. Providing an asset as security for your loan lowers risks for lenders because they can seize the collateral to recover their money if you stop making payments. Car loans are a common form of secured borrowing.
Peer-to-peer (P2P) personal loan. These are loans facilitated by P2P lending platforms that match borrowers to private individual investors. Loan amounts vary between platforms but can range from $2,000 to $80,000, depending on whether the loan is secured.

Types of personal loans you can get with bad credit

A low credit score doesn’t have to stand in your way of getting a personal loan to cover an emergency or consolidate debts.

If you have poor credit but still wish to take out a loan, you may qualify for the following:

Payday loans. Also called small-amount loans, payday loans allow you to borrow up to $2,000 and repay it over a term between 16 days to one year. Typically, repayments are made by direct debit on your payday. While payday lenders have flexible lending criteria and will provide funds quickly, these loans have very high costs. You can expect to pay up to 20% of the amount borrowed as an establishment fee and then a monthly fee of up to 4%.
Risk-based personal loans. Some lenders accept low credit scores but to compensate for taking on more risk, they’ll charge higher interest rates and fees. You can often borrow $5,000 to $25,000 and repay it over a longer term, but this also means paying more interest.

Other ways to borrow money

There are also alternatives to bad credit loans, such as:

No-Interest Loan Scheme or NILS. If you’re a low-income earner, you may qualify for a NILS loan from the Good Shepherd charity to pay for essential goods or services. NILS loans allow you to borrow up to $2,000 and repay it over 12 to 18 months with no interest or fees. Note these are not cash loans, as funds are sent directly to vendors.
Centrelink Advance Payment. Recipients of some Centrelink income support payments may be able to have part of their benefits paid in advance. This isn’t an additional payment, and the advance must be repaid over 13 fortnights. The eligible criteria and advance limits vary depending on your payment.
Pay on-demand apps. Also called wage advance apps, these services offer short-term loans where you can access a portion of your pay in the lead-up to your next payday. Loan amounts are usually small, but some providers allow you to borrow up to $5,000. Fees are commonly 5% of the amount borrowed or a flat fee ranging from $5 to $35.
Buy now, pay later (BNPL). This financing option divides the total cost of a purchase into several smaller payments, often without charging interest or fees. BNPL could make sense when you need the extra time to pay for an essential purchase you wouldn’t otherwise be able to afford.

» MORE: 16 ways to find fast cash when you need money

Yes. The No-Interest Loan Scheme provides loans to low-income earners without credit checks. Payday lenders are another option, but these typically come with expensive fees.

Payday loans and pay advance apps offer flexible lending criteria, but it’s essential to understand the fees involved before signing up.