Bad Credit Loans

A credit score is a personal rating given to you, to show how good you are with money. It impacts your chances of receiving a loan, and how much interest you pay for that loan.

A credit score is a number between 0 and 1000 that indicates how credit-worthy you are. The higher the score, the better your credit rating. Anything above 500 is considered ‘good’. According to Canstar, most people have a credit score between 650 – 768 (above average).

800 – 999 (excellent)
Scores in this range are highly coveted. If you fall within this range, congratulations! Reaching this level takes time and consistent good behaviour. It means you’ve built up a strong credit history over time by always paying your bills when they’re due. It also means you haven’t defaulted on any loans.

700 – 799 (very good)
A score above 700 is also one to be pleased with. It too means you’ve built up a good credit history overtime. Perhaps you don’t have as long of a strong credit history, but it’s good nonetheless! Most people fit in this range and in the range below.

500 – 699 (average)
An average score is a healthy score and in most cases means you haven’t defaulted on any loans or been declared bankrupt. Continue to pay your bills when they’re due, and make sure you don’t apply for credit too many times as that can impact your score.

300 and 499 (fair)
If you fit in this range, you could be too young to have built up a credit score, have failed to pay bills on time, defaulted on loans or been declared bankrupt. Check the tips below on how to improve your credit score.

You need to think carefully about who you apply for credit with, as more declines will further negatively impact your score.

0 – 299 (low)
Unfortunately you are in the riskiest group to lend too. If you’re in this group you probably have a fair idea as to why. It could be that you’ve been consistently late paying your bills, have payment defaults or other negative information on file. If you feel this score is not accurate, and you want to dispute it, the good news is that you can and you should! Learn more about how to correct a credit score.

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 guarantors 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 consider 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

If you have a bad credit rating, or are having trouble paying your bills, you can get support from a qualified professional. MoneyTalks, is a free financial helpline for advice and support from trained financial counsellors. MoneyTalks can also connect you with services in your community. Don’t wait for things to get so bad that you find yourself against a rock and a hard place! Seek support now.

Most New Zealanders are unsure of their current credit rating, so don’t despair if you’re in the dark about your credit profile. The New Zealand Government has a great guide on How To Check Your Own Credit Score. Every time you apply for a loan a credit check is completed so it helps to know your credit score before you apply.

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 four – 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 Loan Company. Here are three factors to consider when deciding on a lender .

1. Choose a low cost lender. High-cost loans can impact your credit score. Loansmart is a low cost lender. The maximum amount we charge in annual interest rates is 29.95%. But our lowest interest rate is 8.95%.

2. Choose a reputable lender. Loansmart is trusted and preferred by tens of thousands of clients across NZ. More than 25% of our lending is 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 loan approved with us. We offer more options than other lenders, and a more inclusive acceptance criteria.

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

It’s possible with Loansmart. If you’ve failed to meet other lending criteria before, we may still be able to help you. We believe in second chances which is why we offer a range of bad credit Personal Loan options including Bad Credit Debt Consolidation Loans and Bad Credit Car Loans. Loan approval is dependent on your current monthly income and financial position, but we try our best to help you. Give us a call today on 0800 255 155 or fill out an online loan application.

The acid test here is how much you can afford to repay. The last thing you want to do is put yourself under more financial pressure, default on loans or fail to meet your payments on time. Call us for a FREE Loan Assessment. We’ll talk you through your options. If you have loans already, we’ll see what you can potentially save on loan costs by consolidating your debts into one low cost loan.

The minimum loan repayment term available is 6 months, while the maximum available is 5 years for unsecured loans. For secured loans the maximum loan term extends to 10 years. For a detailed breakdown of fees and conditions, please refer to our terms and conditions.