Bad Credit Loans

Anything less than 300 is considered bad credit. If you don’t know why your score is this low, ask yourself –

• Have I consistently failed to pay my bills on time e.g. power, internet?
• Are you under 21 years of age?
• Have I defaulted on any other loans?
• Have I applied for credit many times in a short period of time?
• Have I been declined credit multiple times?

1. You’re late paying your bills:

Did you know that every time you’re late paying an internet or power bill, it can affect your credit score? We’ve come across many situations where people were surprised they had a low score. Many own their own homes and have good incomes, but didn’t realise that by missing due dates by just a few days, it was causing their score to slump. If you’re paid monthly, as many salary earners are, and your bills are not timed with when you get paid, this is an easy situation to get into.

2. You’re young:

But that’s not your fault! If you’re young it’s likely your score will be lower, as you haven’t had time to build up a credit history. We understand that, and work hard to find young borrowers solutions. After all, the best way to improve your credit score is to consistently meet your loan repayments. So it’s a bit of a catch-22 this one!

3. You’ve defaulted on loans or acted as a guarantor to someone who has defaulted on loans:

If you’ve defaulted on a loan in the past, then it’s highly likely you’ll have a very poor rating. We also come across situations where applicants have acted as a guarantor for children or partners who have defaulted on loans. Sadly, as a guarantor, if you fail to meet those repayments on their behalf, it impacts your credit score too. So that good deed could end up costing you dearly.

4. You’ve applied for credit too many times, or been declined:

See the section below on ‘Does Applying For Credit Impact My Score’.

The good thing about credit scores is that they’re constantly changing. After five years, most information is cleared. So if you were going through a rough patch five years ago, and were consistently late paying your power bill, chances are it will no longer show on your credit report.

Lenders are more interested in your financial situation today. So if you’ve made a concerted effort to live within your means and meet your existing loan repayments on time, chances are your score will have improved.

The best way to improve your bad credit history is to pay your bills on time (before they are due is the best way to avoid late payments) and keep your credit card balance low.

If you’re worried about not being able to meet your existing loan repayments, or are finding it a bit of a struggle, you may want to apply for a bad credit debt consolidation loan. 

Finding a more affordable repayment plan, is a step in the right direction to helping you rebuild your credit profile. You may also find your loan costs are lowered, as having one large low cost loan is likely more affordable than lots of high cost loans.

We recommend the following online resources:
Sorted: Budgeting Tool
Sorted: How Credit History and Scores Work
Consumer Protection: How credit scores work, the impact of bad credit, and how to improve your score

Short answer – ‘yes’. Every time you apply for a loan, a credit check is completed. Details of credit checks are kept on file for around three to five years. If you are applying for many loans in a short period of time, it can negatively impact your score. This is because it could indicate that you’re applying for more credit than you can afford to repay. You can learn more about what impacts credit scores on the Government’s consumer protection website.

The key thing to remember is this – when applying for a loan, it’s vital to choose the right company. Here are three factors to consider when deciding who to apply with.

1. Choose a low-cost provider. High-cost loans can impact your credit score. Loansmart arranges loans with low-cost lenders. The maximum interest rate is 35.50%, and the lowest interest rate is 9.95%.

2. Choose a reputable company. Loansmart is trusted and preferred by tens of thousands of clients across NZ. Many of the loans we arrange now are to existing clients, this is because they trust us to provide great solutions. Having been in business since 2008, we’re proven, experienced and extremely good at what we do! Review our 5-star Loan Reviews on Google My Business.

3. Choose a lender that can provide more options, for more chances of success. You’ve got a good chance of getting your application approved with Loansmart. We have a range of loan providers to approach. Loansmart gives you access to more options and a more inclusive lending criteria.

Remember, every time you apply for a loan a credit check is completed. Credit checks impact your score. So choose a provider that’s more likely to be able to offer you a solution, so you don’t have to keep applying!

The minimum loan repayment term available is 6 months, while the maximum available is 7 years.