Lenders for Bad Credit Australia: Who Will Approve You in 2026

Quick Answer: In Australia, non-conforming and specialist lenders — including Pepper Money, La Trobe Financial, Bluestone, Resimac, Latitude, and Wisr — will consider applications from borrowers with active defaults, low credit scores, or recent credit events. Rates are typically 2–6% higher than mainstream products. If the defaults on your file were listed in breach of the Privacy Act 1988, removing them first and applying through a mainstream lender produces substantially better rates and terms.

When the major banks say no, where do you go? There are real lenders in Australia who specialise in exactly this situation — but understanding their products, rates, and what you're actually signing up for is critical before committing.

This guide covers every category of bad credit lender in Australia, what they offer, what they charge, and when fixing your credit first is the smarter play.

Types of Bad Credit Lenders in Australia

Non-Conforming Mortgage Lenders

These lenders fill the gap left by mainstream banks for home loan applicants with impaired credit. They assess the whole picture — income, equity, employment history — rather than declining on a score alone.

Rates typically run 2–4% above mainstream mortgage rates. LVR requirements are stricter — most want 80% LVR (20% deposit) minimum for impaired credit applicants.

Specialist Personal and Car Loan Lenders

For personal loans and car finance with bad credit, several lenders operate in this space:

Rates vary significantly based on the severity of credit history and individual circumstances. Always compare comparison rates, not headline rates.

Credit Unions and Mutual Banks

Often overlooked, credit unions (Heritage, People's Choice, Teachers Mutual, Police Bank) take a more holistic view of applications. They have no shareholders to satisfy and use human judgment more extensively than automated bank systems. For moderate credit issues — a single older default, limited history — they can be worth approaching directly.

Small Amount and Short-Term Lenders

Payday and short-term lenders have minimal credit requirements but charge extremely high effective rates — sometimes exceeding 48% p.a. effective. These should be a genuine last resort. The financial cost can deepen rather than resolve a difficult situation.

How to Work With Bad Credit Lenders Effectively

Real Case Study: Sandra, Canberra — Found a Better Lender After File Was Assessed

Sandra, 46, a public servant from Canberra, had been told by two mortgage brokers that her only option was a non-conforming home loan at 9.4% p.a. She had a stable government job, 22% deposit, and solid income. The problem: a $780 default from a private health insurer listed 18 months earlier.

She'd been prepared to accept the 9.4% rate until a colleague mentioned ACS. Her assessment revealed the insurer had listed the default while Sandra's formal written complaint to the Private Health Insurance Ombudsman was still open — a clear Credit Reporting Code breach.

We challenged it. The insurer removed the default in 33 days.

Result: Sandra's Equifax score moved from 504 to 718 in 39 days. Her broker then resubmitted the home loan application to a mainstream lender. Approved at 6.31% p.a. On her $480,000 loan over 30 years, the interest saving compared to the 9.4% non-conforming quote is approximately $270,000. She only paid when we succeeded. Subject to individual assessment; results may vary.

When to Use a Bad Credit Lender vs Fixing Your Credit First

For any situation involving potentially unlawful defaults, a free credit assessment from ACS before approaching any lender takes 24 hours and may fundamentally change your options.

Frequently Asked Questions

Which banks in Australia lend to people with bad credit? The major banks (CBA, ANZ, Westpac, NAB) typically decline applicants with active defaults automatically. For bad credit home loans, non-conforming specialists Pepper Money, La Trobe Financial, Bluestone, and Resimac are the primary options. For personal and car loans, Wisr, Latitude, MoneyMe, and Plenti are among the more established operators.

Do I need a broker to access bad credit lenders in Australia? Not legally required, but strongly recommended. Many non-conforming lenders primarily operate through broker channels and aren't available direct to consumers. A specialist broker with non-conforming experience has access to a wider range of products and knows which lenders will look most favourably at your specific profile. Find ASIC-licensed brokers at asic.gov.au.

What do bad credit lenders look at when assessing applications? Non-conforming lenders focus heavily on serviceability — your income relative to expenses and existing debt obligations. They also consider equity or security (property, vehicle), employment stability, and the nature and recency of credit events. A large deposit or significant equity can partially offset a damaged credit history.

Are bad credit lenders regulated in Australia? Yes. All credit lenders operating in Australia must hold an Australian Credit Licence (ACL) issued by ASIC and comply with the National Consumer Credit Protection Act (NCCP Act). This includes responsible lending obligations — lenders must assess whether a loan is genuinely suitable for you before approving. Be wary of any lender who cannot provide their ACL number.

How long after bad credit can I get a mainstream loan in Australia? For home loans: most mainstream lenders want 12–18 months of clean repayment history after the last negative event, with no active defaults. If defaults were listed unlawfully and removed professionally, there's no mandatory waiting period — apply as soon as the removal is confirmed. For personal and car loans, many non-bank mainstream lenders consider applications with 6–12 months of clean history.

Before You Sign Anything — Get an Assessment

Many Australians accept non-conforming lending rates they didn't need to pay, because nobody told them their defaults were removable. A 24-hour free assessment could change your entire lending landscape.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians avoid unnecessary specialist lending since 2014. No Win No Fee. 98% success rate on accepted cases.

Get My Free Assessment → 📞 0489 265 737 🛡️ ASIC Licensed ACL 532003 | ⭐ 4.9/5 from 976+ Reviews | 🏆 Award Winner 2022–2024

Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: Bad Credit Home Loans → | Refinance With Bad Credit → | Default Removal Services →