Bad credit can affect so many different aspects of your life, from the credit cards you carry to your ability to buy a house or car. And without any options to pay with credit, it’s even tougher to begin improving your credit.
Fortunately, Australians have a few options when it comes to rebuilding or fixing their credit. Here are three ways you can begin improving your credit score if you’re living in Australia.
1. Short-Term Loans
Short-term loans can be the perfect solution for those in need of quick cash and don’t have the strong credit needed to get a traditional credit card. Those with poor or less-than-perfect credit can use short-term loans to make sizable purchases without having to pay for years and years.
Unlike a traditional loan, like a 3-year auto loan or a 20-year home loan, short-term loans allow you to borrow money and repay the full amount within weeks or months. And according to Finder.com¹, they’re becoming increasingly popular with Australians looking to repay their debts quickly.
The following are a few of the short-term loans you can get in Australia:
- Payday loans, which are repaid when you receive your next paycheck. You’ll just need proof of your income to qualify.
- Unsecured short-term loans, which don’t require any collateral and can be repaid over one year.
- Secured short-term loans, which allow you to put up collateral like your home or vehicle as security in case you default on your loan.
The benefit of short-term loans such as these? They can be a huge help if you’re trying to rebuild your credit. Not only are these loans available and awarded to those with bad credit, but they can also help to increase your number of on-time payments and your available credit, two factors that can make your credit score go up.
2. Personal Loans
Personal loans are another great way to get the money you need with the credit score you currently have. These loans, which can be taken out in amounts between $2,000 and $100,000 and repaid over seven years according to Finder.com², can be used for just about anything. From large purchases, like buying a car, to consolidating your debt through refinancing, personal loans have no restrictions.
And personal loans are a great choice for those with bad credit. You can get a secured personal loan, which requires collateral to back the loan in case you default, or an unsecured loan, which doesn’t require any collateral. By paying your monthly payments on time and making sure not to default on this loan, you’ll build your credit score increasingly higher over time.
To find out which personal loans you’ll qualify for, you can search online for personal loans offered in Australia. Based on your income and your current credit score, you’ll be able to narrow down which personal loans are best for your needs and your finances.
3. Prepaid Credit Cards
Prepaid credit cards are an excellent option for anyone with bad credit – they can be much easier to qualify for than a typical credit card, and they can help you grow your credit score over time.
While a typical credit card offers you a credit limit that you can use and repay over time, a prepaid credit card uses your own money to reduce the risk that you won’t repay the charges. When you open a prepaid credit card, your “credit limit” is up to you: you place the amount of money you’d like to have down as a deposit.
When you use your prepaid credit card, you’ll be able to repay your charges over time while your deposit acts as your credit limit. And should you fail to make a payment, the credit card company will simply take that money out of your deposit. There’s no debt added to your credit score, but some cards will actually offer you a real credit card after you’ve proven an on-time payment track record with a prepaid card.
A prepaid credit card can give you the benefits of a credit card, like reward points, security against theft and fraud, and the ability to pay down purchases over time. And there are even different types of prepaid credit cards that can meet your needs, like the following available for Australians³:
- Everyday prepaid credit cards, which are for day-to-day purchases.
- Prepaid travel cards, which you can load Australian dollars onto and cover to foreign currencies when traveling.
- Money transfer cards, which allow you to share a prepaid line of credit with others living anywhere in the world.
- Prepaid reward cards, which are linked to reward programs and give you points or reward dollars for every purchase.
Start Rebuilding Your Credit Today
Bad credit can seriously limit your options and pose a huge financial hurdle – but with options like those mentioned here, you can actually find loans and credit cards designed to help you rebuild your credit. With these financial options, you can increase your credit score and begin to regain your freedom.
Australians can start improving their credit today. Just make sure to do your homework first, researching these different options and determining which is the best for you and your credit score. See if you qualify for any of these credit-improving options, and you can get to work rebuilding your score and history right away.
