Is Bad Credit Rating a Problem to Sanction Loans? : Not Anymore

Everyone is exposed to financial instability, especially during and after the pandemic. And because of this, loans are inevitable in the lives of many people. However, repayment of loans is also tricky in specific situations, leading to a bad credit score.

Credit scores are very crucial as it decides the financial aspects of everybody’s life. Sometimes sanctioning loans for bad credit rating can be difficult. For those who have applied for loans, the banking or the finance companies will consider the whole credit score before sanctioning the money. It is also a way to measure a person’s ability and creditworthiness to repay the money.

Bad Credit Score

Several factors can affect the credit score and the probabilities of getting a loan. They include:

  • Delayed payment of bills or being ignorant of checking the score.
  • Unpaid minimum balance due to bills or EMIs. It can also lead to increasing interests from time to time.
  • High credit utilisation ratio and exceeding the credit card limit.
  • Closing old credit cards can lead to the loss of years of good credit history and repayment habits.
  • Applying for multiple credit cards can make a person appear to be credit hungry, leading to many investigations and leaving a negative credit score.
  • Errors in a credit report may not be a mistake of the individual. However, it can happen. Therefore it is better to review the credit reports to be sure frequently.


A bad credit score is a factor that institutions like banks consider while sanctioning loans. But it is possible to obtain loans when one has a bad credit score due to unavoidable reasons. There are financial companies that approve customised loans for bad credit rating. The financial companies would first review the customer’s job and income source and their ability to repay the amount. Therefore defaults, previous bankruptcies and credit score would no longer be a problem.

Loans are also available for those with pensions or any other Centrelink benefits. The other applications that are eligible for loans are those who receive the following.

  1. Carer payment
  2. Parenting payment
  3. Disability pension
  4. Department of Veteran Affairs (DVA) service pension/partner service pension
  5. Family tax A & B
  6. Aged pension


Even though a bad credit rating is an exception for sanctioning a loan, there are some criteria for a person to apply for loans in the first place. They include:

  • Age: The candidate should be eighteen years or older to even apply for a loan. It is for the companies to be sure of the person’s capability and seriousness in the loans’ repayment.
  • Consistent Income: The person should have a constant income source and proof for the same. The companies would then have clarity of the person’s eligibility to repay the loans. The amount sanctioned would also be based on the income of the person.
  • Overall Profile: The person’s overall profile, while applying for the loan, influences the interest rates associated with the loans. However, it is not just limited to the employment stability, bank conduct, and affordability of the person.

Document Requirements

There are some documents that a person should possess to apply for loans. They include:

  • The complete application
  • Bank statement of three months
  • Proof of income source
  • Privacy statement

Bad credit history shouldn’t be a reason for loans to be denied to a person. Dreams of a person are unlimited, and the future needn’t always be the same as the present.

Related Articles

Leave a Reply

Check Also
Back to top button