credit card with bad credit score

Applying for Personal Loans with Bad Credit

If you have a history of bad credit it does not mean you can’t be considered for a personal loan in NZ. There are a number of different loan options in New Zealand for people with bad credit, as well as things applicants can do to improve their chances of being approved.

If you’re considering applying for a loan and think you may have bad credit, you should follow the following steps:

  • Step one: Check your credit score.
  • Step two: Identify ways to improve your credit score.
  • Step three: Find a personal loan provider that lends to your credit profile.
  • Step four: Structure your loan application to enhance its creditworthiness.

Step one: Check your credit score

How bad is my credit score?

The first thing to do is to establish how good/bad your credit score is. This will also allow you to check whether that score is correct and help you identify ways you can improve that score before applying.

As of October 1st 2019, credit bureaus in New Zealand are required by law to disclose credit reports to individuals for free. Furthermore, these “credit report enquiries” will not impact your score, whereas previously many enquiries on an individual’s profile could have had a negative impact.

To access your own credit report, visit any (or all) of the credit reporting companies and submit a request for your individual credit file.




Be aware that each of the bureaus will have a different algorithm for calculating a credit score and will not necessarily have access to the same data. It is common to see a variation in scores between the different providers.

credit check online

What’s a good credit score?

Credit scores range from 0 to 1000. What a “good” score is will be relatively subjective and will depend on how much you’re looking to borrow and the conditions of the loan.

Centrix has provided the following summary of how scores are generally interpreted and what percentage of the population fits in each bracket.

Score range Traditional risk band name % Population What it means for the consumer
>845 Excellent 20 You should be eligible for the best credit cards, loans and utility services (but there are no guarantees).
769 – 845 Very Good 20 You should be eligible for most credit cards, loans and utility services.
650 – 768 Average 30 You should be eligible for standard credit cards, loans and utility services offers.
495 – 649 Fair 20 You might get credit cards, loans and utility services but these may have additional conditions.
<495 Poor 10 You’re more likely to be rejected for most credit card or loan facilities.

What does the information on a credit report mean?

The score on a credit report is a summary of the rest of the information outlined in the report. The key sections are:

  • Age of file: how long has the person had a credit footprint?
  • Identification verification: has the identification source (drivers licence, passport) been previously verified
  • Existing credit: what credit has previously been extended to the applicant?
  • Credit defaults: does the applicant have a history of late payments or defaults?
  • Judgements: has the applicant had any previous credit activity that has required legal action?
  • Insolvencies: has the applicant been declared bankrupt or undertaken No Asset Procedure.
  • File activity: how many credit report enquiries has the applicant had? Are they regularly seeking credit?
  • Property ownership: does the applicant own any real estate?
  • Number of aliases: has the applicant used other names in the past?
  • Consistency of address: does the applicant move around a lot?
  • Company affiliations: is the applicant listed as a director or shareholder of any companies on the New Zealand Companies Register.

For more information read our article on “What is a Credit Score and How Does it Affect My Personal Loan?“.

Step two: Identify ways to improve your credit score

What should I do if I notice incorrect information on my credit report?

If you notice information on your credit report that is incorrect, you should contact the credit bureau to have it corrected.

Further information on how to do this is outlined on the NZ government website.

How else can I improve my credit score?

If you have reviewed your credit report and noticed outstanding defaults, consider addressing these before applying for a new loan.

Contrary to popular belief, most lenders are sympathetic to changes in circumstances and are willing to work with borrowers to address outstanding debts. Many would prefer to restructure outstanding debts or arrange payment plans than simply have the borrower stop making payments and be forced to declare the account as in default.

So if you have defaults listed on your credit report, contact the providers to discuss payment arrangements.

Learn from your mistakes

Defaults are listed on a credit report for five years. So if you have defaulted on payments in the past and change your ways, your credit score will improve over time.

Keep this in mind for the future. Often something as simple as making a payment arrangement can keep your credit score intact, whereas simply defaulting will impede it for five years.

credit cards and cash

Step three: Find a personal loan provider that lends to your credit profile

Can people with bad credit get loans in New Zealand?

Yes! Not all loans in New Zealand are given to people with perfect credit scores. Different providers specialise in offering credit to people with lower scores.

Be aware, that from a lenders perspective a borrower with a lower credit score is seen as higher risk. Statistically, there is a far greater chance of that borrower not repaying the loan and therefore these lenders need to charge higher interest rates to offset that risk.

Also, be aware that applying for multiple loans and being declined multiple times will further hurt your credit score, so you are better off to spend some time researching for lenders that service your credit profile.

The easiest way to do this is to phone the companies you’re interested in borrowing from and ask what type of credit score they require. Do note, that a credit score is not the only factor considered in assessing an application but it doesn’t hurt to ask the question first.

QuickCash Finance Limited regularly approve loans to applicants with credit scores between 200 and 300 (depending on other elements of the application).

Step four: Structure your loan application to enhance its creditworthiness

Can you add a joint applicant or guarantor?

If your credit score is particularly bad, consider asking a family member or friend to be a joint applicant or guarantor on your loan application. If that individual has a better credit score, this will greatly improve your chances of having your application approved.

As a word of warning, joint applicants and guarantors are liable for the loan in the event that the primary borrower defaults. So in asking a family member or friend to be part of your application, make sure that they are aware of this and that you are as well. It’s one thing to default to a faceless corporate lender, but if you default with a joint applicant or guarantor involved they will likely end up having to pay. Make sure that you have considered that scenario.

Can you add security to your loan application?

Security (or collateral) is an asset that is attached to a loan, giving the lender legal claim over that in the event that the borrower defaults.

The most common forms of security in New Zealand are vehicles and real estate. So if you own either of these, you can add these to your application and it will improve your chances of being approved.

If you don’t own anything that could act as security, do you have a family member or friend who would be willing to be a joint applicant or guarantor on the loan and provide their vehicle as security?

Apply for an appropriate amount

If you know you have bad credit and no security, don’t waste your time applying for a $100,000 loan.

By law, personal loan providers in New Zealand must assess your ability to make repayments and cannot approve a loan that is unpayable. Refer to the CCCFA for more information.

With that in mind, you will be asked to provide information of your income and expenses. As a personal check, before even considering a loan, you should take the time to prepare a budget and ensure that you can afford the repayments having first covered your living costs and provided for your dependants.

Once you have confirmed that you have the capacity to make repayments, think about how much you want to borrow and over what time frame. Most online providers have loan calculators on their websites where you can adjust the amount borrowed and time period to see what the repayments will be. Check out ours on the website!

Use your next loan as a way to improve your credit score

Although this article is focussed on whether you can get a personal loan even if you have bad credit, it’s important to highlight that your credit score is ever-changing. Although you may have had bad credit in the past, if you are disciplined in your future borrowing and repayments then you will see your credit score improve in the future.

In the same way that credit scores punish defaulters, they rewarded good payers. So think of your next loan or even utility bill as a way to improve your credit score by making payments on time.

If you need any other information or want to have a chat about your situation just give us a call on 0800 784 252.

Disclaimer: This article is intended to provide general information only. It does not take into account your financial needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.