A bad-credit personal loan is not a single product. It is a category of specialist lending that runs across three or four credit tiers, with different lenders, different rates and different policy at each tier. The honest first step for any borrower in this segment is to know which tier their file actually sits in, because the rate gap between near-prime and specialist is material, and the gap between specialist and payday is enormous.
This guide covers what counts as bad credit under Australian Comprehensive Credit Reporting (CCR), the lender landscape across each tier, the rate ranges lenders published on 10 October 2026, and the structured path back to a prime rate as your credit history rebuilds.
What counts as bad credit in Australia
Australian credit reporting moved to Comprehensive Credit Reporting (CCR) in stages between 2018 and 2021. Moneysmart lists two main credit reporting bodies, Equifax and Experian, and each can hold a file on you that includes:
- Repayment history information (RHI), showing whether each monthly repayment was made on time, late, or missed across all of your credit accounts for the past 24 months.
- Account information: every credit account you have, including limits, balances, and the date the account was opened.
- Negative listings: defaults, court judgments, serious credit infringements, and bankruptcy or Part IX agreement records.
- Credit enquiries: every time a lender accessed your credit file in the past 5 years.
The specific signals that place a borrower outside a Big 4 credit policy include: any default of $150 or more that has been 60+ days overdue and listed; missed repayments (60+ days) on existing credit in the past 24 months; multiple late payments (30 days) in the past 24 months; an active bankruptcy or Part IX agreement; serious credit infringements (clearout, fraud); and excessive credit enquiries in a short window.
The three tiers of specialist lending
Most Australian specialist lenders structure their personal loan books into three rough credit tiers:
- Near-prime. Borrowers with one or two minor listings (a single paid default, a recent late payment that has since been remedied, or a slightly thin credit file due to recent arrival in Australia). Priced above a clean file, often within a mainstream lender's range.
- Specialist. Borrowers with material credit impairment: one or more unpaid defaults, multiple late payments, or a recent end-of-bankruptcy listing that is still within the CR Code retention window. Priced by the specialist lenders, well above the major banks.
- Sub-specialist. Borrowers with very recent or severe adverse listings (active default of large size, multiple bankruptcies). Sub-specialist tiers exist but are limited to a small handful of lenders and price materially higher again.
The lender you go to depends on which tier your file is in. Approaching a Big 4 lender with a specialist-tier file just produces a credit enquiry decline that itself hurts the file. Approaching a sub-specialist lender with a near-prime file gets you a rate materially above what you should have paid.
Which lenders write each tier in 2026
Lenders that publish personal loans for less-than-perfect credit include:
- Pepper Money. Well known to brokers, but its personal loan policy is near-prime at most: it publishes that applicants should have no defaults or active payday loans and no current or prior bankruptcy or court judgement. Unsecured personal loans from $5,000 to $50,000, secured from $15,000 to $100,000, terms 18 to 84 months, no fees.
- Liberty Financial. Long-established non-bank that says poor credit history is considered on its Fresh Start car loans.
- Latitude Financial. Owns a large personal loan book including the GO Mastercard and standalone personal loans. Writes across near-prime and some specialist tiers.
- Jacaranda Finance. Publishes bad credit loans: unsecured $3,000 to $15,000 at 27.95% to 29.95% p.a. (44.50% to 46.50% comparison) and secured $3,000 to $30,000 at 14.95% to 29.95% (30.98% to 45.50%), with comparison rates on $10,000 over 36 months.
- OurMoneyMarket, MoneyMe, NIMBLE. Smaller online lenders that price by credit tier. MoneyMe lends $5,000 to $70,000 and charges a $0 establishment fee only for excellent credit, otherwise $395 or $495.
- Specialist credit unions and mutuals. Some customer-owned banks have specialist credit policies and will write near-prime files at competitive rates for existing members.
What lenders publish, 10 October 2026
Published ranges, read on each lender's own page on 10 October 2026. Comparison rates include most fees; each is on $30,000 over five years except Jacaranda's, which is on $10,000 over 36 months.
- Major banks, unsecured: CommBank 7.25% to 22.25% p.a. fixed (8.65% to 23.53% comparison); Westpac 7.29% to 22.19% (8.69% to 23.48%), with a 16.99% median (18.31%); NAB 7.50% to 22.00% (8.54% to 22.88%).
- Online lender priced by credit tier: Wisr 7.59% to 24.59% p.a.; its example is 7.59% (8.50% comparison) for excellent credit.
- Specialist bad credit lender: Jacaranda Finance 27.95% to 29.95% p.a. unsecured (44.50% to 46.50% comparison) and 14.95% to 29.95% secured (30.98% to 45.50%).
- Payday loan (small amount credit contract): Moneysmart's example of $2,000 repaid over a year costs about $3,360 in repayments, $1,360 more than was borrowed.
The honest reading: a specialist loan is expensive against a prime rate, but on Moneysmart's example a payday loan costs 68% of the amount borrowed in a year. For a need of a few thousand dollars, a No Interest Loan, a hardship arrangement or a smaller specialist loan over a short term is usually cheaper in total cost.
WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
The deliberate path back to prime
The specialist personal loan should be approached as a 2 to 4 year bridge, not as a long-term arrangement. The structured path back to a prime rate looks like this:
- Year 0: Specialist lender approves the loan at the specialist-tier rate. The loan is structured with a clean fixed monthly repayment.
- Years 1 to 2: Make every repayment on time. Each on-time monthly repayment is logged in repayment history information at the credit bureau and counts as a positive signal. Pay down or close any other adverse facilities. Avoid new credit applications.
- Year 2: Pull your own credit file from Equifax and Experian (each is free once every three months). Adverse listings older than 2 years are starting to age off. The repayment history is now showing a clean 24-month record.
- Year 2 to 4: Apply to refinance the specialist loan to a customer-owned bank or non-bank prime lender at a materially lower rate. The clean repayment record on the specialist loan is the central positive signal in the new application.
- Year 5+: Defaults aged off the file. The rebuild is complete. The Big 4 lenders are now accessible again for any future credit need.
What not to do
Three things consistently make bad-credit personal loan files worse:
- Shotgun applications. Applying to 6 or 8 lenders in a short window registers 6 or 8 credit enquiries on the file, which itself is a material negative signal. A broker can check which lenders' criteria you meet before an application goes on your file.
- Buy-now-pay-later as a workaround. BNPL accounts increasingly appear on credit files under CCR, with limits assessed as potential debt for lender serviceability. Stacking BNPL while already in specialist credit is digging the hole deeper.
- Going straight to payday for a non-emergency need. Payday loans are appropriate for short-term emergency cash-flow gaps under $2,000. For any larger or longer need, the specialist personal loan path is materially cheaper.
When secured beats unsecured
If you own a car or have equity in a home, a secured personal loan against that asset can materially reduce the rate compared to unsecured specialist lending. Jacaranda's own ranges show it: its secured loans start at 14.95% p.a. against 27.95% unsecured. The trade-off is that the lender holds security over the vehicle.
For borrowers with home equity, a home loan top-up is almost always cheaper than any unsecured personal loan, including at prime tier. The credit assessment is different (it is a home loan application, not a personal loan application), and the buffer rules under APRA APG 223 apply. A broker can model both options.
Frequently asked questions
What counts as a bad credit history in Australia?
Under Comprehensive Credit Reporting (CCR), Moneysmart lists two main credit reporting bodies, Equifax and Experian, and you may have a file with both. Adverse listings include late payments (30, 60, 90 days), defaults (typically $150 or more, 60+ days overdue), serious credit infringements, court judgments, and bankruptcy or Part IX agreements. Any of these can place an applicant outside standard prime lender credit policy.
Can I get a personal loan with bad credit in Australia?
Often, but it depends on how recent and how serious the listings are. Specialist non-bank lenders write near-prime and specialist credit tiers at higher rates than a prime lender would charge; Liberty Financial, for example, says poor credit history is considered on its Fresh Start car loans. Not every non-bank lender does this. Pepper Money, often named as a bad-credit option, publishes that applicants should have no defaults or active payday loans and no current or prior bankruptcy or court judgement. Major banks generally will not write personal loans for applicants with recent adverse listings, so checking each lender's published criteria first avoids a decline that adds another enquiry to your file.
How much higher is the rate for a bad-credit personal loan?
A lot. On 10 October 2026 the major banks published unsecured ranges from 6.99% to 22.25% p.a., with the floor for excellent credit, while Jacaranda Finance, which lends to bad credit, published 27.95% to 29.95% unsecured (44.50% to 46.50% comparison on $10,000 over 36 months) and from 14.95% against a car. The comparison rate is the figure to focus on, not the headline.
How long do defaults stay on my credit file?
Under the Privacy Act 1988 (Cth) and the CR Code, default listings stay on your credit file for 5 years from the date listed (7 years for serious credit infringements such as clearouts). Late repayment listings stay for 2 years. The path back to prime credit is to build a clean repayment record across those years.
Should I use a payday lender instead?
No, in almost every case. Payday loans (small amount credit contracts of up to $2,000) can charge an establishment fee of 20 per cent of the amount and a monthly fee of 4 per cent. Moneysmart's example of a $2,000 payday loan repaid over a year costs about $3,360, $1,360 more than was borrowed. A No Interest Loan of up to $2,000 for essentials, or a hardship arrangement with an existing lender, costs far less.
Can I refinance from a bad-credit lender to a prime lender later?
Yes, and this is the intended path. Specialist lenders price for the credit risk on day one, and once the credit file has rebuilt (late payments drop off after two years, defaults after five) a borrower can apply to refinance at a lower rate. A clean repayment record on the specialist loan is itself a positive credit signal that helps the refinance application.
Does a credit check hurt my score?
Yes, but the impact is small for a single application. Each formal credit enquiry is recorded on your file and is visible to subsequent lenders. Multiple applications in a short window (the "shotgun" pattern) signal financial distress and materially hurt the file. Moneysmart notes that applying for a lot of loans can hurt your score, so check which lenders' criteria you meet before you apply.
What documents will a specialist lender want?
Standard documents for a personal loan application: photo ID, two recent payslips (or alternative-doc evidence for self-employed), three months of bank statements covering income and major expenses, current credit file, and detail of any existing debts. Specialist lenders sometimes want additional documentation explaining the circumstances behind any adverse credit listings.