Bad Credit Personal Loan Australia: What to Know in 2026

Quick Answer: Personal loans for bad credit are available in Australia through specialist lenders — but rates of 20–35% p.a. versus the 8–12% available on a clean credit file represent a massive cost difference. If defaults on your credit file were listed in breach of the Privacy Act 1988, removing them typically takes 30–60 days and can halve or more the rate you're offered. Always check removability before accepting a high-rate loan.

Getting a personal loan with bad credit in Australia is possible. The harder question is whether the rate you'll be offered makes financial sense — or whether a short wait to fix your credit file saves you far more than the urgency is worth.

This guide covers your real options, real rates, and when the fast path costs you the least.

Personal Loan Rates: Bad Credit vs Clean Credit

These numbers illustrate why the decision to apply now versus fix first matters enormously — even on personal loans, which are smaller than home or car loans.

Who Lends Personal Loans to Bad Credit Borrowers in Australia?

Several lenders operate in the specialist personal loan space and consider applications from Australians with impaired credit: MoneyMe, Wisr, Plenti, Latitude Financial, and smaller specialist lenders accessed through brokers. These lenders use open banking data, employment history, and income verification alongside credit file data to assess risk.

The upside: approvals are possible where banks say no. The downside: rates reflect the risk, often significantly. Comparison rates — which include fees — are the number to watch, not headline rates.

Real Case Study: Destiny, Townsville — 35 Days Saved $13,800

Destiny, 31, a teacher aide from Townsville, needed a $28,000 personal loan to cover essential home repairs after a weather event. Her only specialist lender quote was 26.4% p.a. over 5 years.

Her Equifax score was 461. The blocking entry: a $540 default from a buy-now-pay-later provider, listed while her account was under formal dispute with the Australian Financial Complaints Authority. AFCA dispute listings are explicitly protected under the Credit Reporting Code — the provider had no lawful basis to list while the complaint was active.

ACS challenged the listing. Removed in 29 days. Destiny's score moved from 461 to 682.

Result: Destiny's score moved from 461 to 682 in 29 days. Approved for $28,000 at 11.2% p.a. through a credit union. On a 5-year term, that's approximately $13,800 less in total interest compared to the 26.4% quote. She waited 35 days total from first contacting ACS to loan approval. She only paid when we succeeded. Subject to individual assessment; results may vary.

Steps Before Applying for a Bad Credit Personal Loan

1. Get your credit reports from all three bureaus — Equifax, Experian, Illion
2. Identify the entries causing lender rejections
3. Get a free ACS assessment — find out if any can be removed
4. If removal viable, wait 30–60 days for mainstream rates
5. If urgent and not removable, work with a specialist broker

Your Options With a Bad Credit Personal Loan

Option 1 — Fix the credit file first. If any defaults were listed unlawfully, this is almost always the best financial choice. Free assessment, 30–60 day removal, mainstream rates unlocked.

Option 2 — Specialist unsecured lender. High rates but accessible. Use a broker to find the most competitive option across the market rather than applying directly to individual lenders (which generates multiple hard enquiries).

Option 3 — Secured personal loan. Pledging an asset — savings account, vehicle — significantly reduces the rate even with bad credit. If you have assets, explore secured options first.

Option 4 — Credit union or mutual lender. More human assessment process than banks. For minor or dated credit issues, often worth approaching directly.

Frequently Asked Questions

Can I get a personal loan with bad credit in Australia? Yes — specialist lenders will consider applications from Australians with impaired credit files, including active defaults. Rates are significantly higher than mainstream lenders. If any defaults on your file were listed unlawfully under the Privacy Act 1988, removing them first is almost always the better financial decision.

What is the interest rate on a bad credit personal loan in Australia? Specialist bad credit personal loan rates in Australia typically range from 20% to 35% p.a., compared to 8–12% for mainstream personal loans. The exact rate depends on the severity of your credit history, income, loan amount, and whether you offer security. Always compare the comparison rate, not the headline rate.

How fast can I get a personal loan with bad credit? Specialist lenders can approve and fund within 24–48 hours for small amounts. This speed is part of their appeal. However, if your credit file has a removable default, a 30–60 day wait for credit repair typically results in a rate that saves far more than any urgency benefit.

Will applying for a personal loan hurt my credit score? Yes — each formal application generates a hard enquiry that stays on your file for 5 years and reduces your score. Multiple applications in a short period compound the damage. If you've already had rejections, stop applying and get your credit file assessed before trying again.

Can I get a personal loan without a credit check in Australia? Some small lenders advertise "no credit check" loans, but these are essentially payday loans with extremely high effective rates and short repayment windows. They are not a sound financial tool for covering substantial expenses and can quickly compound debt stress.

What credit score do I need for a personal loan in Australia? Mainstream banks typically want Equifax 650+. Online specialist lenders may consider scores below 500 depending on income. The presence of an active default is often a bigger barrier than the score itself — many lenders have automatic decline rules for active defaults regardless of the score number.

Check If Your Default Can Be Removed First

Before accepting a high-rate personal loan, find out in 24 hours whether the entry blocking your mainstream approval can be challenged. Free, no obligation, no upfront cost.

Australian Credit Solutions — ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild. No Win No Fee. 98% success rate on accepted cases. Award winner 2022, 2023, 2024.

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This article provides general information only and does not constitute legal or financial advice. Australian Credit Solutions Pty Ltd holds ASIC ACL 532003. Results may vary.

Related reading: Personal Loans With Bad Credit → | How to Get a Loan With Bad Credit →

Case study financial summary: On $28,000 over 5 years, the difference between 26.4% p.a. and 11.2% p.a. saved Destiny approximately $13,800 in total interest paid.