‘Guaranteed approval’ credit cards don’t require a credit check for approval, and applicants may be approved more easily. Sometimes called ‘easy approval’ credit cards, these cards tend to be the preferred option for applicants with bad credit scores.

What about Secured Credit Cards?

While secured credit cards are available in North America, there are currently no secured credit cards on the Australian market.

Secured credit card providers require applicants to have equity in a property, or be able to deposit a sum of money into the bank which they can use as security if you fall behind on your repayments.

You might be able to use secured credit cards to rebuild your credit rating, since most providers report your repayment to credit bureaus. However, secured credit cards can be expensive to set up, and they also tend to charge high fees.

What are the alternatives?

If you can’t get guaranteed approval or secured credit cards in Australia, there are other options that might work for you.

Pay on demand apps as an alternative if you have bad credit

You can check out pay on demand apps in Australia, like Beforepay, which let you access your pay early and then repay it automatically over your next pay cycles. Pay on demand may help in emergency situations, and are one of the few options that often don’t require a credit check.

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Dealing with debt that’s affecting your credit score with a balance transfer

If it’s credit card debt – not a default on your score – that’s stopping you from being approved for credit cards or other types of loans, you can use resources like a balance transfer credit card to get on top of it.

A balance transfer lets you move your credit card debt to a new card that offers 0% interest on your transferred amount. That means you can make a plan to pay down your debt without the monthly interest charges stacking up on top.

To be very clear though, balance transfer credit cards are still subject to credit checks, so a default on your credit score could cause your application to be denied.

Carefully check the details of all balance transfer credit cards to make sure it suits you and what you want to achieve. You can use our comparison tool to compare balance transfer offers, annual fees and interest rates.

Important to note: Balance transfer cards still require credit checks, so they’re better suited for those with good credit, but have credit card debt or the potential to default on a card.

Instant Approval Credit Cards

Instant approval credit cards are similar to guaranteed approval cards, but they do involve a level of credit check. These instant approval credit cards are often offered over the internet and will give a decision in around 60 seconds. They can sometimes charge a higher interest rate and offer a lower credit limit, as although they do have some form of credit check, they don’t use the same rating methods as standard cards.

Remember that every time you apply for a card that involves a credit check, you may be adding to your poor score. If you’re interested in a 60 second decision credit card, you can check the following credit card options:

• ANZ Low Rate
• ANZ Platinum Credit Card
• ANZ First Credit Card
• ANZ Frequent Flyer Black Credit Card
• Westpac Low Rate credit card
• Virgin Australia Velocity Flyer Card

‘First’ cards and no interest rate credit cards

‘First’ credit cards: these cards, like the ANZ First Card, are geared towards new credit card holders with little or no credit history. While it likely won’t stand up if you have bad credit, it may be easier if you’re just starting out.

No-interest credit cards: No-interest credit cards are relatively new in Australia. They don’t charge interest, just a monthly fee and minimum repayment amount. You can find out more about no-interest credit cards here.

Store credit cards

Store cards are similar to instant approval credit cards, because they offer an instant approval at the store. Store cards are often the first credit card carried by many people. If you want to apply for a store card, check the interest rate, as it can often be much higher than standard cards. If this is the case, always pay off the balance at the end of the month before interest starts accruing.

How to deal with bad credit

First up, apply for a copy of your credit file and see what it says about you. Apply to have any errors corrected, and start working on improving your credit. You can do that by:

• Making all repayments on time, including your home loan, car loan, personal loan or credit card
• Speaking to your creditors to work out a payment plan if you’re struggling to make repayments
• Meeting with a financial advisor to discuss your options
• Considering a debt consolidation plan

You can also try speaking to your bank to see if they’ll use your history with them as good will, even if you have poor credit history or none at all.

A Final Thought…

The factor in common amongst guaranteed or instant approval cards is the low-level or non-existent credit check. But credit card companies are keen on applicants having a good credit score, because people’s previous behaviour with credit tends to be one of the best indicators of their future use of credit.

As defaulted debts and chasing these defaults is one of the biggest costs incurred by credit card providers, a good way of limiting their losses, and so maintaining lower interest rates, is to limit the number of people carrying their credit cards who have a poor credit history. For this reason, a prospective applicant should consider whether he or she really wants a card that doesn’t require any credit check.