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The maximum you will be charged is a 20% Establishment Fee and a 4% Monthly Fee. Under the current legislation lenders do not charge an annual monthly interest rate for our Small Amount Credit Contracts. You may know this as Annual Percentage Rate or APR(%). Click here to see a worked example.

The Annual Percentage Rate for Secured Medium Loans is 48%. Comparison Rate is 67.41% p.a. This comparison rate is based on a Medium Amount Credit Contract for an amount of $2,500 over 2 years and a $400 establishment fee. Fees and charges are payable. Click here to see a worked example.

The Interest Rate for Secured Large Amount Loans is 21.24%. Maximum Comparison Rate is 48% p.a. 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. Click here to see a worked example.

Have A Case of Bad Credit? Learn The Best Remedies To Improve Your Credit Score

Measuring the quality of products and services is something is that deeply entrenched in today’s thinking. We measure and draw conclusions from our income, jobs, homes, cars etc. Well, the same goes for borrowing and how you handle your finances. A credit score measures and displays how you handle your finances.

Your credit score is a very powerful ally when it comes to your borrowing a few bucks (or quite a few bucks). A credit score is a metric in which a lender will judge whether you’re eligible for a personal loan, home loan or car loan. Therefore, it’s incredibly important to maintain a good score, to make borrowing easy and hassle-free. However, life doesn’t always go to plan and sometimes our finances can go off track. A bad credit isn’t a death sentence, you can always rebuild for a better financial future. So, let’s divine into the world of credit score and see how to rebuild one when things to south.

What is a credit score and who looks at it?

A credit score essentially represents your reputation to a financial lender. Without a credit score, they wouldn’t know your past financial history and how you handle your financial commitments. Furthermore, it’s really important to keep your score squeaky clean. Typically, the health of your score will affect how much moolah you can borrow from a lender.

A credit score is rated in between a calculated range that ultimately demonstrates your ability to keep financial obligations and repay the credit. When you’re applying for any type of credit, including a personal loan, or credit card, the lender will include your credit score as part of the assessment. The state of your credit will affect whether or not you are approved for a personal loan or credit card.

Calculating a credit score

Your credit score is akin to a school GPA. It simply calculates how your finances fair compare to others. Lenders will typically assign different interest rates depending on the quality of your credit score. Furthermore, if you have a poor score, they will deem you a risky investment and will increase your interest rates. Therefore, keeping your credit score healthy will save you money in the long run. Make sure you know the relationship between your credit cards and your credit score.

The most widely sourced score is calculated by FICO and ranges from 300 to 850. 850 is the top (virtually unattainable) score and 300 is considered a bad credit score. The slightest change in your credit score (even by 10 points) will affect the interest rates you are offered by a lender.

In general, any score over 740 is excellent and will give you the best interest rates. If your score is below 660 then it’s like you’ll be offered poor rates compared to other customers.

To calculate a credit score, FICO examines your credit report. A credit report is a document containing all the information of your past financial interactions. Your credit score is made of different facets and each is weighted differently. Here’s a breakdown of how FICO calculates your credit score:




Personal Loanpal




  • 35% payment history
  • 30% amount owed
  • 15% length of history
  • 10% new credit
  • 10% types of credit used

And the greatest of these is…payment history. Payment history largely dictates the result of your credit score. Payment history is a record of whether you’ve paid your bills on time. So, when you’re looking to improve your credit score, repaying your loans on time is a key factor. More on that later on.

Payment history may be the heavyweight, however, FICO examines all the listed components of your finances and calculates them into a credit score.

A Bad Credit Score

Having a good credit score is extremely beneficial when it comes to borrowing credit. Therefore, when you have a bad credit score it can significantly damage your ability to borrow credit and also incur higher interest fees. There are many contributing factors that could hurt your credit score. Here’s a list of top culprits that can topple your credit score (so, keep an eye out!):

  1. Late repayments

    If you are late to pay any of your loan or credit card repayments, it can heavily affect your credit score. Furthermore, it’s vital to stay on top of all your repayments and to not commit to a loan you cannot repay.

  2. Top tip: To avoid late payments, always make sure you have your repayment funds in a separate account to eliminate the temptation to spend.

  3. Loan Defaults

    Loan defaults are just as detrimental to your credit score as late repayments. Defaulting on your loan demonstrates a lacking in financial stability and will generally incur higher interest fees.

  4. Having an account charged off/sent to collections

    If your lender has reason to believe you’re not going to repay your loan, they will charge off your account. Sometimes they might send your account to collections. Lenders often use third-party debt collectors to collect payment from you. Both of these actions deeply affect the health of credit score.

  5. Filing for bankruptcy

    Bankruptcy is the last resort for most people after they have exhausted all other options. Before filing for bankruptcy, it’s a good idea to seek alternatives, such as debt consolidation.

  6. Receiving a judgement

    If a case of late repayments involves the court, then you’ll receive a judgement. It’s important to pay your judgement, as an unpaid judgment will further worsen your credit score.

  7. High credit card balances

    Your level of debt is extremely important when it comes to calculating a credit score. Level of debt is measured by credit utilization, having a high credit utilization decreases your credit score.

  8. Closing credit cards that still have remaining balances

    Stopping a credit card that still has a remaining balance could imply that the credit card maxed out, causing your credit score to drop.

  9. Closing old credit cards

    The length of your credit card history makes 15% of your score, so, it’s important to keep all your credit on the report. Closing old credit cards implies that your credit history is shorter than it really is.

  10. Applying for credit cards and loans in bulk

    Credit inquiries only account for 10% of your credit score, however, it’s an easy 10% to maintain. Simply limit your loan and credit card applications. So, shop around for the best personal loan for you before applying (having trouble finding a loan? That’s where we come in!).

  11. Only having one type of credit on your history

    Only applying for one type of your credit will look poor on your credit history. Diversity in credit accounts for 10% of your credit score, so keep an eye on the type of credit you apply for.

How does bad credit affect you?

Unfortunately, having bad credit does affect how lenders see you when you apply for a loan or credit card. Typically, an applicant with poor credit is viewed as a riskier investment. With sufficient evidence that you’ve struggled with repayment or finance in the past, it may be hard to be approved for new credit.

When you apply for credit with bad credit, you’ll likely to (unfortunately) encounter a sea of rejections and extra costs. You’re also likely to run into problems with renting apartments. Some landlords may not approve your application due to poor credit history or simply demand a higher security deposit. If you’re looking to rent, see how to rent with bad credit.

Other essential expenses that may increase with bad credit is insurance premiums, car loans, utilities, cell phone contract. So, if you have a poor score, account for the potential increase in these expenses in your budget.

From this testimony, you may be thinking that bad credit is a death sentence. Well, it’s not. Life happens and the most important thing to pick yourself up when you’re down.

So, dust yourself off and listen to this!

The power of the internet has forged a path for a generation of money lending online sites that are more lenient than traditional lenders. We are one of them! We find you the loan that is suitable for your financial circumstances. So, whether it’s bad credit or you’re receiving Centrelink payments, we would love to help!

How to improve your credit score

We told you there was light at the end of the tunnel! When there’s a problem, there is always a solution. You simply have to find it. So, to help you on your credit score cleanse here are some top tips on how to improve your credit score.

Admitting and seeing that there is a problem is the first step to solving it. The second step is to start paying your bills on time. It may seem obvious, however, it’s the most important step to start repairing your credit score. 35% of your score accounts for payment history, so it’s a vital makeup of your score.

Other remedies that can rebuild your credit score include:

  • Not applying for new credit: Focus on repaying your old credit on time. Set up goals, charts and rewards for when you make repayments on time.
    Paying off any outstanding loans and debts: Again, focus on repaying your old debt on time. Set a goal on your calendar to be debt free and count down the days until the celebration can begin!

  • Keep credit card balance low: Refrain from borrowing more money on your credit card. Credit card debt can be like a cotton wash cycle that never ends.

  • Keep your debt-to-credit ratio balanced: For example, if your credit card has $2,000 limit and your credit card balance is $300, then 15% debt-to-credit ratio. Furthermore, if you tend to spend a similar amount of your credit card month-to-month consider applying for a card with a higher limit to lower your ratio.

  • Diversify your credit: If your credit history was a movie it should look like Hidden Figures; inclusive of all types of credit!

Personal Loan Pal and bad credit personal loans

At Personal Loan Pal we believe that you don’t plan emergencies, that’s why you need a quick Plan B that will see you through a tough time. We will pair with you a lender that is suitable for your financial needs. Someone who can understand the situation and help get your finances back on track. Bad credit personal loans are a variable option when you have bad credit and need a tiny boost in your funds.

Let’s be Pals!

We are 100% online, so, unfortunately, we can’t be there in person, however, we’d love to help you on your loan journey.

Have questions about our loan service or about bad credit personal loans? Simply hop onto our website and send us a quick message and our loan finding specialists will get back to you.

Want more of Personal Loan Pal? Great! Follow us on Facebook, Instagram, and Twitter and also keep up to date with the latest personal finance and lifestyle trends via our blog.

Example of how small personal loans work

Loan amount

$200 minimum
$2,000 maximum

Costs

Most small personal loan providers charge up to 20% as an establishment fee upfront. You’ll then pay a 4% monthly fee.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %.

In APR terms, the maximum annual percentage rate on our loans between $300 and $2000 is 199.43%.

Terms

12
months minumum
12
months maximum

Example:

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

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

Example of how medium secured personal loans work

Loan amount

$2,100 minimum
$4,600 maximum

Costs

Annual Percentage Rate (APR) is 48% Comparison rate is 67.41% p.a.

Terms

13
months minumum
24
months maximum

Example:

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

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