What Are My Options If I Have An Insufficient Credit History?

By Angela Monroe - June 18, 2019

Bad credit is not the only reason for loan rejection. Lenders can also turn you down if you have an insufficient credit history.

An insufficient credit history means having none or not enough record in the credit reporting bureaus to generate a credit score. This happens when you have not used a credit card or applied for any loan in the past. Although you have no negative credit information or history of late payments, your lack of credit records hinders lenders from assessing your creditworthiness.

Although it won’t be easy to get approved for loans, there are still ways to get financing:

1. Apply for a secured credit card.

A secured credit card is one of the basic tools to help you purchase stuff or pay for services even if you don’t have ready funds available. It also helps build your good credit score and credit history if used responsibly.

The difference of a secured credit card from an unsecured one is that it requires a security deposit. The deposit acts as collateral that protects the credit card issuer in case you don’t make your payments, including the interest on balances.

Your credit card limit is based on your security deposit, usually the equal amount. If you decide to close your secured credit card line or upgrade to an unsecured one after several months or years of responsible use, you can get your deposit back.

2. Get a credit-builder loan.

A credit-builder loan, as its name suggests, is designed to build or improve your credit score instead of helping you finance a purchase or service. It is usually offered by small financial institutions, like credit unions and community banks.

Unlike standard consumer loans where you use the money you borrowed then make the monthly repayments, a credit builder loan holds your borrowed money in the bank. The lender puts your chosen loan balance into a savings account. You will have to make regular repayments, which are in turn reported to the credit bureaus. Once you complete the repayments, the lender will return your total loan balance including the interest you potentially paid at the end of the loan term.

Not only does this setup builds your good credit score, it also helps you save money.

3. Get a personal loan.

If you need to secure financing to purchase something or pay for a service, you can take advantage of a personal loan. This type of loan is not purpose-specific and can be used for a variety of reasons.

While some lenders require a stellar credit rating to grant a personal loan, others do not. Those who are not strict with credit score usually charge a higher interest rate.

Generally, you need to have a stable source of income to get approved. This assures lenders that you are capable of making on-time repayments. You may even be required to pay a down payment to secure the loan. On the positive note, putting a down payment will lessen your loan amount, as well as lower down your interest rate. The larger your down payment, the lower your interest rate will be.

4. Seek help from a co-signer.

If you seek finance for a specific purpose, like a car loan or a small business loan, get a co-signer. This is a person with a stable source of income and good credit score who is willing to take equal responsibility for the loan repayments with you.

Since the lenders cannot measure your creditworthiness, they will base their decision on your co-signer’s credit records. Aside from loan approval, your co-signer’s profile also affects the interest rate and terms of the loan.

Being a co-signer is a risky role, however. If you can’t complete the repayments, his or her credit records will be negatively affected alongside yours. He or she will also be held legally accountable if the lender files a legal complaint against you.

5. Consider a bad credit loan.

A bad credit loan is not only intended for people with poor or bad credit ratings, but also for those who have an insufficient credit history or do not have a credit record at all.

Unlike standard consumer loans, a bad credit loan gives little importance to your credit score or history for approval. Instead, it requires other proofs of your financial capacity to pay back the loan. These include your latest income tax returns and bank statements, collateral and down payment. You also need to pay a higher interest for the loan.

Not all bad credit loans are alike. Before getting one, shop around for loan offers from several lenders and compare rates and terms. If you are not familiar with how bad credit financing works, seek advice from loan specialists.


Loans for People With Bad Credit help all Australian citizens over the age of 18 get approved for loans with the best rates and terms. We assist people with good credit, bad credit or no credit history at all. Get a Bad Credit Loan Pre-Approval to start your application.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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