Credit Score For Personal Loan: What You Need to Know
Wondering if your credit score is good enough to secure a personal loan? Understanding the relationship between your credit rating and loan eligibility is crucial when seeking financial assistance.
Whether you're looking to treat yourself to a holiday, fund home improvements, or cover unexpected expenses, your credit score plays a vital role in determining not just approval, but also the rates and terms you'll be offered.
Credit24 provides personal loans with flexible conditions designed to meet your unique financial situation. Our straightforward application process can make accessing funds quick and simple, even if your credit history isn't perfect.
What is the minimum credit score for a personal loan in Australia?
In Australia, the minimum credit score required for a personal loan can vary significantly between lenders. Traditional banks often require higher scores than online lenders or finance companies that specialise in different risk profiles.
Most lenders use your credit score as a key indicator of your reliability as a borrower. A higher score demonstrates consistent financial responsibility, while a lower score may signal potential risk.
Though 550 is often considered the baseline for Experian ratings (falling into their “Fair” category), securing favourable interest rates and terms usually requires scores in the “Good” range or higher – typically:
- Experian: 625+
- Equifax: 661+
- Illion: 500+
Each credit reporting agency in Australia uses different scoring models and ranges, which can sometimes create confusion.
With a score in the “Good” range or higher, you'll typically qualify for personal loans with more competitive interest rates. Scores in the “Average” range may still qualify, but often with higher interest rates. If your score falls into the “Below average” category, you may face more limited options and higher costs.
How is your credit score determined?
Credit reporting agencies use several factors to calculate your credit score, each carrying different weight:
- Payment history (35–40%)
This is the most influential factor. On-time and late payments, defaults, and serious events such as bankruptcies are all recorded. - Credit utilisation (20–30%)
This is how much of your available credit you’re using. Lower utilisation (ideally under 30%) is generally better. - Length of credit history (around 15%)
Longer, well-managed credit histories tend to improve your score. - Types of credit (around 10%)
A mix of credit types (credit cards, personal loans, mortgages) can positively influence your score. - Recent credit applications (10–15%)
Multiple applications in a short time can temporarily reduce your score due to “hard inquiries”. - Public records
Court judgments, bankruptcies, and debt agreements can have a strong negative impact and stay on your report for years.
Under Comprehensive Credit Reporting (CCR) in Australia, positive information—like on-time repayments—is also recorded, giving a more complete picture of your behaviour over time.
Tips to improve your credit score
If your credit score isn't where you'd like it to be, there are practical steps you can take:
- Make all payments on time
Use direct debits or reminders to avoid late payments. - Reduce credit card balances
Aim to keep your utilisation below 30% of your total limit. - Don’t close old accounts unnecessarily
Older accounts help lengthen your credit history. - Limit new credit applications
Only apply when necessary and avoid multiple applications in a short period. - Check your credit report regularly
You’re entitled to free copies from major bureaus. Dispute any incorrect listings. - Register utilities and telco accounts in your name
Under CCR, on-time payments for these can help build your score. - Consider debt consolidation
If multiple debts are hard to manage, consolidating into one loan with a single repayment may help you stay on track. - Build a positive history
If you’re “thin file” (limited credit history), consider starter products like secured cards or small, well-managed loans.
Improving your credit score takes time. Most negative information can remain on your report for 5–7 years, but its impact usually decreases as you build up more positive behaviour.
Can I get a personal loan with bad credit?
Yes, it’s possible to get a personal loan with bad credit in Australia, but:
- Your options may be more limited
- Interest rates are likely to be higher
- Loan amounts and terms may be less flexible
When you have poor credit, lenders may focus more on:
● Current income and employment stability
● Debt-to-income ratio
● Any active defaults or bankruptcies
● Purpose of the loan
● Whether you can offer security (collateral)
Secured personal loans (backed by an asset like a car or savings) generally offer:
- Higher approval chances
- Lower interest rates than equivalent unsecured loans
Unsecured loans are still possible but usually cost more.
Be cautious with:
- “Guaranteed approval”
- “No credit check” loans
These often come with extremely high fees and interest that can worsen your situation. Always read the terms and understand the total cost of the loan before accepting.
Many reputable lenders use risk-based pricing, tailoring the rate to your profile instead of using a flat rate for everyone.
Does a personal loan affect your credit score?
Yes, a personal loan can affect your credit score in several ways:
- Application stage
The lender runs a credit check (hard inquiry), which can cause a small temporary dip. - New account opened
A new loan lowers the average age of your accounts, which can slightly reduce your score at first. - Positive repayment history
Making consistent, on-time repayments can gradually improve your score, especially under CCR where positive data is reported. - Credit mix
Adding a personal loan to a profile otherwise full of revolving credit (like credit cards) can help diversify your credit mix. - Debt-to-income ratio
While not part of your credit score formula itself, taking out a loan increases your total debt, which lenders will consider on future applications. - Missed or late payments
Late payments or defaults are recorded and can damage your score significantly, often more than the positive impact of on-time payments.
Used responsibly, a personal loan can support your credit profile over time. Mismanaged, it can harm it.
What personal loans can I get with an average credit score?
With an average credit score (around 460–660 with Equifax), you may still have access to multiple loan types:
- Unsecured personal loans
No collateral required; rates will likely be higher than those offered to excellent-credit borrowers. - Secured personal loans
Offering collateral (car, savings, etc.) can improve your rate and borrowing limit, even with average credit. - Debt consolidation loans
Designed to combine multiple debts into one loan, often at a lower rate than credit cards. - Fixed-rate loans
Predictable repayment amounts, helpful for budgeting. - Variable-rate loans
Sometimes lower initial rates, but with the risk that repayments may increase. - Peer-to-peer loans
Some online platforms may be more flexible than traditional banks and worth exploring.
With average credit, you may experience:
● Rates 2–5 percentage points higher than top-tier customers
● Lower maximum loan amounts
● Shorter available terms
● Higher fees in some cases
To improve your chances and your offer:
- Demonstrate stable employment
- Lower your existing debts first
- Consider offering security
- Apply with a co-signer where suitable
Can I get a personal loan with a credit score of 550?
Yes, it can be possible to get a personal loan with a credit score of 550 in Australia.
A score of 550:
- Is “Fair” with Experian
- Sits in the “Average” range with Equifax
With this score, you can typically expect:
- Higher interest rates than advertised “from” rates
- Lower maximum loan amounts
- Possibly shorter terms
- More documentation requirements
- Fewer mainstream bank options and more reliance on specialist or online lenders
To boost your chances:
- Check your credit report for errors and fix anything incorrect.
- Save a deposit or show additional savings where relevant.
- Prepare proof of stable income and employment.
- Consider secured loan options using acceptable collateral.
- Compare multiple lenders (including credit unions and online providers).
Try using pre-qualification tools where possible, as these use soft checks and don’t impact your score.
Summary: how personal loans can affect your credit score
Taking out a personal loan:
- Can slightly reduce your score at first (due to hard inquiry + new account)
- Can improve your score over time with a strong repayment record
- Can hurt your score if you miss or default on repayments
It’s important to consider whether the loan is affordable and fits into your budget before you apply.
Meet Credit24: Apply for a personal loan today
At Credit24, we understand that credit scores don't always tell the full story. Our personal loan assessment looks at your overall financial situation, not just a single number.
To apply for a Credit24 personal loan, you’ll generally need to:
● Be at least 18 years of age
● Be an Australian citizen or permanent resident
● Have a regular source of income
● Have a reasonable credit history (perfect credit isn’t required)
● Earn at least $1,000 per month
● Provide personal identification
Our personal loans offer:
● Quick online application – complete it in minutes
● Fast approval process – without long waiting periods
● Flexible loan amounts – borrow between $500 and $10,000
● Customisable terms – choose 6 to 36 months
● Transparent fees – no hidden charges
● No early repayment penalties – pay off your loan sooner without extra cost
If approved, funds can be disbursed to your account in minutes*, giving you fast access to money when you need it most. Whether you're covering an unexpected expense or financing a planned purchase, Credit24 can help with simple, clear personal loan options.
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