Payday loans are one of the most controversial financial products currently available. While there is no question that payday loans do affect your credit rating, the bigger question is perhaps whether they have a negative or a positive influence. With some payday lenders marketing their products under the guise that consumers will see their credit rating benefit upon repaying on time, it is certainly a question that needs to be addressed.

How Payday Loans Appear on Your Credit File

As with any other type of borrowing, almost all payday loans will appear on your credit file, under the consumer credit section. Remember that your credit file shows the following information:

Credit enquiries, meaning applying for a payday loan, even if you ultimately don’t take out the loan, the enquiry will still appear on your file.

The types of credit you currently have open accounts for.

• The terms of the account, including the opening and closing date. A short time between dates will highlight the short-term nature of the loan and perhaps that it is a payday loan.
• The credit limit of your accounts, in the case of a payday loan this will be the amount you borrowed.
• Repayment history.
• Details of any defaults, judgements and overdue accounts.

Even if a payday loan did not affect your credit rating, lenders are still able to see whether you have any payday loans by looking at your credit file. Some lenders/banks may not lend to you if you have any active payday loan accounts. Others may even have a policy not to lend to you if you have had any payday loans within a specific recent time.

How Payday Loans can be Positive

A payday loan on your credit file may be positive in that, if you meet your repayment obligations to the lender, you will have a clean repayment history and you may be seen as a reliable borrower, at least for this type of financial product.

However, different types of credit are weighted differently when it comes to credit scoring. For example, if you make mortgage repayments on time every month, these are given more weight than a payday loan. The full range of factors listed above can contribute to your credit score, and may also be considered by lenders, who will use your credit score but only as part of a wider consideration of your credit application.

How Payday Loans Can Affect Your Chances of Getting Credit

Depending on the number of credit enquiries you have made, the types of credit you use, and the terms of your borrowing all being visible on your credit file, payday loans may end up contributing to a lower credit score. Even if you prove to be a reliable borrower and never make a late repayment, the fact you are reliant on payday loans can be a signal that your regular financial management isn’t as good as it should be, especially if you find yourself reliant on short term borrowing on a regular basis.

From the perspective of the lender, remember that they are regulated and are duty bound to act responsibly. If you are reliant on short term borrowing on a regular basis, lenders may decide it wouldn’t be responsible to accept you for a long term asset loan or a credit card, as your credit history may raise questions as to how your circumstances would enable you to meet your repayments.

Payday loans tend to have higher interest rates, which means consumers often find themselves repaying one loan but then needing to take out another shortly afterwards. This pattern has the potential to be disastrous for your credit rating and how lenders will view your credit file, so while you may feel you have no option but to take out a payday loan in some circumstances, ideally they are something to avoid at all costs.

Important things to know before you apply for a car/motorbike loan whilst you are in a part 9 debt agreement, and below we will also list out what you will need to supply upfront as part of the loan assessment process.

For those of you who may or may not be aware, a part 9 debt agreement is a form of bankruptcy, and due to this being a form of bankruptcy there are limited second chance lenders in the market place that will assist/consider an application for a car loan or motor bike loan, at this stage the only loans available for those in a part 9 debt agreement is either a car loan or motorbike loan, and there are only 3 second chance lenders available to choose from, whilst all other second chance lenders will require you to be discharged from the part 9 debt agreement first.

Below are the requirements/conditions to qualify for an opportunity to get a loan whilst in a part 9 debt agreement.

How Long You Need To Be in a Part 9 Debt Agreement.

• With lender 1. You need to be in your part 9 debt agreement for 6 months minimum
• With lender 2. You need to be in your part 9 debt agreement for 12 months minimum
• With lender 3. You need to be halfway through your part 9 debt agreement

Maximum Loan Amounts

Loan amounts that are available for those in a part 9 debt agreement can be anywhere from $12,000.00 to $25,000.00, there are a few factors that will determine how much you can get which will be based on your overall profile, how much surplus income you have that can be used for the repayments after all liabilities have been deducted, how long you have been in your job, and which one of the lenders we can use as listed below.

• Lender 1 & 2. Will only fund a maximum of $12,000.00 for the purchase, plus their fees on top
• Lender 3. Will only fund a maximum of $25,000.00 for the purchase, plus their fees on top

 Other Minimum Requirements.

1. Employment status and term of employment

• You must be employed!
• Full time permanent – 3 months minimum with current employer, with a total 12 months continuous employment history.
• Full time casual – 3 months minimum with current employer, with a total 12 months continuous employment history.
• Part time permanent – 3 months with current employer, with a total 12 months continuous employment history.

Compulsory Documents Required & Conditions

1. The last 3 months transaction history of all bank accounts held in your name, directly backwards from the day you apply.

• Bank statements must not have any dishonors on them and must also not show that you overdraw your account on a regular basis.

2. Last 2 pay slips, no more than 30 days old from the day you apply
3. A copy of your part 9 statement from the start date showing your repayment history

• Your part 9 statement must not show any late payments.
• Your part 9 must also be up to date and have no areas showing.

Other Conditions.

1. You must not have any new defaults or judgements after the date you started your part 9 debt agreement.

If you require any further information, please contact our office and speak with one of our Senior Loan Specialists on 1300 982 279

Or apply now for a Free Loan Assessment using the Apply Now button below.

The irony of a credit score is that, a lot of the time, people don’t know what theirs is like until they need to rely on it or when they apply for a loan/credit of some sort.

If you’re thinking of making a big purchase such as a car, motorbike, boat, jet ski, caravan etc, then chances are, you’ll need a loan to make it happen, and chances are when you apply for that loan, your lender will be looking very closely at your credit history.

So, how do you know if you have bad credit? And if you do, what does it mean for your loan application?

What is a Bad Credit Score?

Your credit score is basically an expression of the risk of lending you money from the viewpoint of lenders. The number itself is derived from a sum total of your credit history which, when pulled together, is the statistical ‘proof’ of how likely you are to make repayments (for loans, bills etc.) on time – or at all.

Even if you have a broad financial history, with loans and credit cards from a few banks and other financial institutions, you will only ever have one credit score. The final number of your credit score pools together all this financial history – from all the banks and other financial institutions you have ever done business with – and condenses it into a single number.

The number itself sits somewhere between 0 and 1200. The higher your score, the lower the risk – or the more trustworthy lenders will consider you. Conversely, the lower your credit score, the higher the risk and the more difficult your credit application will be.

How Do You Get a Bad Credit Score?

To begin explaining how you get a bad credit score, it is first easier to explain how to maintain a good credit score. Most of these things are pretty basic and are simply what you would expect a potential lender to want you to do.

Some keys points are:

• Make repayments on-time – no matter how small
• Don’t miss repayments
• Don’t skip payments altogether
• Pay attention to reminder notices and respond promptly
• Don’t max out your credit cards or go over the limit
• Make the effort to check your credit report regularly to make sure there are no mistakes
• Fix any mistakes that have been made on your credit report as soon as you find them

Getting a bad credit report is easy – just do the opposite of the above list. Even if you do most things on the list, except that you regularly make late repayments, this will lower your credit score. The more late you make repayments, the more your credit score will be adversely affected.

Some Warning Signs that You May Have Bad Credit:

Usually, it is pretty obvious if your credit is not good. If you owe money, the debt collectors who are chasing it will make it fairly clear in a number of ways that they are aware of your deficit. Some of the more serious warning signs include:

• Multiple phone calls from debt collection agencies
• Multiple letters from debt collection agencies
• Multiple unpaid bills from one or more providers
• Overdue balances
• Credit card defaults
• Notices from debt collectors
• Late repayments on current loans you may have

Any of the above signs is bad news for your credit report. If any of these apply to you, then it might be time to start thinking about repairing the damage.

How to Check Your Credit Score

Even if none of the above-listed signs apply to you, if you are thinking of applying for a loan then it might be worth your while to check your credit report – even if just for your own peace of mind.

Checking your credit score can be done through Equifax an Australian credit reporting agency. In some circumstances this process is free, but it can take time and requires a written application, proof of identity and some patience. It can be quicker if you are prepared to pay a fee.

Tips for Fixing Your Credit Rating

Once you have a bad credit score, it can be hard to repair the damage. Often there is a Catch-22 involved in getting back on track: to repair your credit report, you need to use credit responsibly. But if you have bad credit, it can be difficult getting access to that very credit you need to use.

Sometimes the easiest way is to start small before you go big. For instance, taking out a small loan through a non-traditional lender can be the first step to proving you are financially trustworthy. If you prove that you can make repayments on time with a small loan, then lenders may be willing to give you the benefit of the doubt with a larger loan.

Ultimately, repairing your credit score takes time and patience. You will need to regain the trust of traditional lenders. Start with a small loan that you are confident of being able to repay. Be very diligent in meeting your repayment commitments, then, over a period of time, gradually increase the amount lenders are willing to extend you and make sure to meet the increased loan commitments. Your ‘new’ and improved track record will demonstrate that the lenders were right to grant you more credit.

How Will Bad Credit Affect Your Loan Application?

It is not impossible to get loan approval with a bad credit history. Though it can be frustrating and sometimes time-consuming, there are still some lenders who are willing to give you a chance.

For years, Auto Link Finance has been helping Australians with bad credit get loan approval to finance their dreams.

If you want to talk about your options for getting a loan with bad credit, call our bad credit loan specialists with over 30 years’ experience on 1300 982 279

If you have bad credit in the past and you’re now financially stable and looking to get a lender to provide you with a loan, the good news is: many reputable lenders are prepared to give you a second chance. Getting a car loan with past bad credit is possible – provided you tick all the right boxes and provide the lender with good reasons to give you a loan and a second chance.

Many people in this situation submit poor quality applications – often the same poor-quality application repeatedly, hoping that one will eventually be approved. Unfortunately, this approach does not work, and it also damages your credit score as every enquiry you make with a lender drops your credit score. Finance companies tend to be quite rigid in their lending criteria – they′re looking for good reasons to approve your finance application, and its best to leave the application process with a reputable finance broker that specialize in this area.

The following tips can assist you in demonstrating those reasons for a lender to give you a second chance.

1. Honesty
It′s vital to be completely honest in every statement/details you make/provide in your application. If you have a bad credit history, you can rest assured that financiers will investigate your loan application closely. Failing to disclose your previous credit history & failing to give accurate information on your loan application, such as how long you have been at your address, all current liabilities, how long you have been at your current job, whether your full time, casual or part time, only for it to be found by the financier is an immediate red flag and your application for finance will be declined.

Of course, honesty alone is not enough – you need also to be careful you make complete statements in your application. Don′t leave anything relevant out. Withholding information – even information that you believe might damage your application – is a much worse idea to hold back this information than full disclosure.

Auto Link Finance encourages full disclosure as part of our free credit assessment process, this way we can give you a true and accurate outcome of your chances to secure a car loan or loan of any type today, and if you don’t qualify for finance today, we will provide you with general advice on how to repair your current situation and when to re-apply with a better chance to get finance.

2. Your Credit History
Always access your credit file online before applying for a bad credit car loan (accessing your credit file is free and easy). It’s a great way to see exactly where you stand. If there′s an entry or entries you don′t understand, you are free to contact the companies listed on those entries for further information. Also, the more legwork you do in the lead-up to your application, the less legwork is required on the part of the application assessor – the result being your application will be dealt with faster. Being well prepared, up-front and complete in your application helps build confidence in the mind of the financier.

3. Banking Records
Your recent bank records are an essential part of a bad credit car loan application, bank statements for the last 3 months from all bank accounts held in your name are a compulsory requirement from all lenders that look at people with past bad credit. These will be reviewed carefully. It′s essential to prove that you can live within your means and demonstrate that you don’t over draw your account on a regular basis, any existing debts you are paying off are being honoured and there are no bounced or reversed payments in that time frame. Having the capacity to save regularly & showing some sort of savings even if it′s only a small amount each week, can also be a great advantage but not compulsory requirement, it is excellent if you can demonstrate the capacity to save – which, when you think about it, demonstrates that you have some surplus income you can devote to loan repayments after covering your regular living expenses.

If your account gets overdrawn regularly, or if any direct debits are regularly dishonoured because of insufficient funds, this reflects poorly on your ability to meet your current commitments and that alone will cause the lender to decline your application.

4. Loan and credit card history
If you have credit cards, or any other loans, your repayment history with these commitments will be carefully reviewed and must be perfect or very close to perfect for the last 6 months. You need to demonstrate a consistent history of making the payments on time. In the case of a credit card, it′s a good idea to demonstrate you′ve made more than the minimum monthly payment required. A solid recent history with credit will go a long way to ensuring your current application is reviewed very favourably.

5. Employment
A reliable, regular income is essential because you need this to service any future debt the financier may approve. If you have a solid employment history, this will reflect well on your application. Generally, you′ll need to have been employed beyond the probationary period with your current employer. If you′re employed on a casual basis, you′ll need to demonstrate a reasonably long relationship with that employer – say, more than 3 months at least, with consistent employment for the last 12 to 18 months. In general, however 3 months in your current employed is still considered to be fine, having had many different employers in a short span of time doesn′t assist a bad credit car loan application, because finance companies are looking for you to demonstrate a solid, stable income source to service the debt.

 As a part of our free loan assessment here at Auto Link Finance, we go over all these items with you to make sure you tick all the right boxes, so as you can see there is a lot to think about when applying for bad credit car loans, bad credit bike loans, bad credit boat loans or bad credit loans of any type, it is very possible to get a bad credit loan in Australia if you tick all the right boxes.

Call a bad credit Loan Specialist now on 1300 982 279, our service is Australian wide or apply on line today to get a no obligation free loan assessment.

It is always better to be prepared when you apply for a loan and you have had bad credit in the past. Our bad credit check list will help you increase your chances.

1. You must have a steady and reliable income
2. Any and all income sources must go into your bank account
3. You must not have had any credit problems in the last 6 months from the date you apply
4. You must not have more than 2 pay day loans current at the time you apply
5. Any current loans or debts you have, must have a perfect repayment history for the last 6 months from the date you apply

Employment

1.  Casual employment, greater than 3 months with current employer
2.  Part time employment, greater than 3 months with current employer
3.  Full time employment, greater than 3 months with current employer
4.  Agency employment, greater than 6 months with the one agency, with consistent employment in that time

Other income sources we accept on top of the above.

 Centrelink

• Family Part A & B
• Parenting payments
• Disability Pension
• Retired pension
• Self-funded pension
• Disability support pension
• Veterans Pension

Compulsory documents required from you when applying for a bad credit loan.

1. Evidence of all income sources, if employed we would require your last 2 pay slips, if you also get centrelink income then we would need a recent centrelink income statement
2. A transaction listing from all bank accounts held in your name for the last 90 days