Credit Scores & Bad Credit Loans: Your Financial Key

Need a reliable car to get to work or take the kids around? Or maybe you’re looking to simplify your finances by consolidating existing debts into one easier repayment? Whatever your reason, as soon as you think about getting a loan, you’ll probably hear the term: ‘credit score.’ For many, this isn’t just a number; it’s an obstacle.

For many Australians, a low credit score can feel like a roadblock, especially when searching for the finance you need. It’s easy to feel disheartened, but here at Fox Finance Group we believe everyone deserves a fair go. We understand that life happens, and a less-than-perfect credit score shouldn’t put what you need on hold.

That’s why we’re here to help you navigate the world of bad credit and show how to improve your financial standing.

What is a Credit Score and Why Does It Matter?

Think of your credit score as your financial report card. It’s a three-to-four-digit number that lenders use to assess your creditworthiness, essentially seeing how reliable you are at repaying borrowed money. A high credit score tells lenders you’re a lower risk, while a lower credit score might suggest a higher risk.

Those three-to-four-digit numbers influence everything, from your loan approval to interest rates and loan terms. This means understanding your credit score is the essential first step towards taking control of your financial journey.

There are different credit reporting bodies in Australia, and each calculates scores differently. Let’s look at the two most well-known ones:

Equifax Credit Score Ranges:

Equifax scores typically range from 300 to 850 and are categorised as follows:

• Excellent (800-850): These are the gold standard. Lenders see you as a very low risk, offering you the best interest rates and loan terms.
• Very Good (740-799): You have a strong history of positive credit behaviour and are highly likely to be approved with good interest rates and loan terms.
• Good (670-739): Most lenders consider scores in this range acceptable, seeing you as a relatively low-risk borrower.
• Fair (580-669): Often considered “subprime,” individuals here might face some challenges getting a loan, as lenders may see you as a higher risk.
• Poor (300-579): If your score falls into this range, you’ll likely find it difficult to get approve for new credit. You can expect high interest rates and potentially lower borrowing amounts.

Experian Credit Score Ranges:

• Excellent (800-1,000): Well above average, indicating a stellar credit history. You can be looking at the lowest interest rates and best loan terms.
• Very Good (700-799): Above average, showing very good credit behaviour. Still looking at low interest rates and good loan terms.
• Good (625-699): This is the average range, indicating a good credit score. You may have middle to high interest rates.
• Fair (550-624): A fair score that might require more consideration from lenders.
• Below Average (0-549): This score is likely to be considered a poor credit score by lenders, so you can expect high interest rates and potentially lower borrowing amounts.

You can learn more about these ranges directly from the sources:

• Equifax “What Are the Different Ranges of Credit Scores?”
• Experian “Credit Scores: Get to Know Your Score”

Understanding Prime, Near Prime, and Subprime:

When lenders are assessing your application there are three main groups your credit score can be categorised in, which are:

1. Prime Borrowers: These are individuals with excellent or very good credit scores (typically 700 plus). This represents the lowest risk category to lenders and can qualify for low interest rates and loan terms. If you’re a prime borrower seeking a loan, you’ll likely have your pick of the best deals.
2. Near Prime Borrowers: Borrowers in this category will generally have good or fair credit scores (roughly 600-699). While they might not get the absolute lowest interest rates, they would still have access to being approved for a loan. Lenders might offer slightly higher interest rates or require a bit more documentation, but approvals are still common.
3. Subprime Borrowers: Individuals with fair to poor credit scores (typically below 600) fall into this category and are considered a higher risk. This makes it more challenging to get approved through big banks or traditional lenders. From here options like loans for bad credit become incredibly important. Specialised lenders in this field are willing to look beyond just a credit score and more at the ability to repay the loan. They will often come with higher interest rates to offset the increased risk for a lender.

For those specifically looking for bad credit loans in Australia, understanding the subprime category is crucial.

How to Improve Your Credit Score:

If you are looking to engage in a bad credit loan, there are four easy steps you can take to help improve your credit score over time:

1. Pay Bills on Time: This is the most crucial factor. Late payments significantly impact your score. Set up reminders or direct debits to help you not miss a payment.
2. Reduce Debt: Lowering your credit card balances and other debts improves your debt-to-income ratio. This can be managed with a debt consolidation loan giving you the ability to lump all your debts into one easy repayment.
3. Limit New Credit Applications: Each application can lower your credit score. Only apply for credit when you genuinely need to.
4. Check Your Credit Report: As part of our assessment process we provide you with a free credit score check. This is where we go over your score and let you know everything that is on it and answer any questions you may have.

Improving your credit score is a marathon, not a sprint. Consistency and good financial habits will pay off, opening more opportunities, better interest rates and loan terms for your future. Even taking out a bad credit loan can be beneficial, especially if you prioritise paying it on time! This will show future lenders you can maintain a loan and pay it back well.

Fox Finance Group: Your Partner, No Matter Your Score

At Fox Finance Group, we understand that not everyone fits perfectly into the “prime” credit category. Life happens, and sometimes your credit history can reflect past challenges rather than your current financial capability.

That’s why we’ve built a strong network of over 50 lenders on our panel. This extensive range means we don’t just rely on a handful of mainstream options. Instead, we have access to a diverse pool of lenders, including those who specialise in helping customers across all credit score ranges, from prime borrowers seeking the best rates, to near prime and subprime individuals who are needing a second chance.

Whether you have an excellent credit score and want to find the most competitive interest rate, or you’re looking for bad credit loans and need a lender who understands your situation, our team of experienced lending specialist are here to help match you with the best loan terms. Our goal is to get you stress-free, quick, and easy financing.

We pride ourselves on being the go-to for bad credit loans in Australia.

Ready to Take Control?

Don’t let a lower credit score define your future, we’re here to help you find the best path forward! Give it a go and apply now!