How a poor credit score can hurt your personal loan application

By JP Pelosi · · 2 min read
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Image: Getty

As the end of financial year approaches, money matters are top of mind. Personal budgets might be tightening, spending habits are in focus and borrowing money is surely a consideration for some households.

But before taking a step toward frugality, you might need to run a fine-toothed comb over your finances. And a major part of this is knowing about your credit score. Your credit score is a number or rating that tells lenders about your borrowing and repayment history. Importantly, it also includes how often you’ve shopped around for credit - as in, borrowed money.

So, in short, lenders use this score to help decide whether to lend to you. If they think your credit score looks okay they'll likely give you a loan, like a personal loan, but will still consider how much to actually loan you and at what rate of interest.

This is why it's crucial to stay on top of your debts, get to your bills promptly, and do your best to manage your money with efficiency.

Think of keeping good credit like staying fit! And like the challenge of overcoming a soft middle, you've got to stick with it. After all, your credit score isn't set in stone - it can change.

This means there are ways to keep your score in check and maintain a healthy level. To help with this, we called the experts at Pioneer Credit to give us the following tips.

Here are 5 easy ways to protect and enhance your credit score:

  • Check and understand your credit reports: Regularly checking credit reports allows you to identify and address any errors or discrepancies that could negatively impact your score.
  • Make timely bill payments: Consistently paying bills - on time - helps build a positive payment history. But if a third party company ends up handling your outstanding debt, they can help maintain your financial wellbeing and improving your overall debt position.
  • Keep credit 'utilisation' low: What's this? It's basically what you owe in debts divided by how much credit you have available at a given time. A good ratio demonstrates responsible credit use and shows lenders that you're managing your debt well.
  • Diversify credit mix: Having a mix of different types of loans, such as credit cards, personal loans and a mortgage, can demonstrate responsible handling of your financial obligations overall.
  • Limit new credit applications: Only apply for credit when necessary. Going for multiple new credit accounts within a short period can raise concerns among lenders and potentially lower your credit score.

Okay - once you've got your credit score in check, it can be easier to borrow money. For example, a personal loan can be an effective way to borrow a larger sum with a considered repayment plan. Our Mozo experts know personal loans and have done the hard work for you already. Compare some of the top personal loans on the market now!

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Last updated 21 May 2025 Important disclosures and comparison rate warning*
  • Low Rate Personal Loan

    Exceptional Credit, $5,000 - $75,000, or up to $100,000 for eligible purposes

    interest rate
    comparison rate
    Monthly repayment
    6.28% p.a.to 18.99% p.a.
    6.28% p.a.to 21.78% p.a.based on $30,000
    over 5 years

    Competitive low rates for borrowers with exceptional credit on 1-7 year loans from $5,000 up to $75,000 (or up to $100K for home improvements or car loans); plus free extra repayments. Winner of Mozo's Experts Choice Excellent Credit Unsecured Personal Loan 2024 and Excellent Credit Secured Personal Loan 2024 awards ^. Min. income of 25k after tax, to apply.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.28% would cost $35,033.88 including fees.

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  • Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    6.45% p.a.to 26.95% p.a.
    6.45% p.a.to 26.95% p.a.based on $30,000
    over 5 years

    Borrow up to $50,000 unsecured. Perfect if you earn more than $22,100 p.a. and have good to excellent credit. Multi-year winner of Mozo’s Experts Choice Unsecured Personal Loan Award, 2021, 2022, 2023 & 2024^'

    Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 6.45% would cost $35,176.93 including fees.

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  • Secured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.90% p.a.to 19.19% p.a.
    6.33% p.a.to 20.77% p.a.based on $30,000
    over 5 years

    Competitive rates depending on credit score. No monthly or early repayment fees. No penalties for paying your loan off sooner. Borrow from $5,000 to $80,000. Your choice of 3, 5 or 7 year terms. You will be given the option to use a vehicle as collateral to secure your loan. One upfront fee applies.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 5.90% would cost $35,025.41 including fees.

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  • Debt Consolidation Loan

    $5,000-$75,000

    interest rate
    comparison rate
    Monthly repayment
    6.28% p.a.to 18.99% p.a.
    6.28% p.a.to 21.78% p.a.based on $30,000
    over 5 years

    Competitive fixed rates on loans up to $75,000 depending on your credit score. Zero monthly account keeping fees, no exit fees and no early repayment fees. Make weekly, fortnightly or monthly repayments, over 1 to 7 years managed entirely online, at any time. Fast and easy, 100% online application.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.28% would cost $35,033.88 including fees.

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  • Ready Credit Personal Loan - 3 Year Fixed Rate, Balance Transfer Offer

    Unsecured

    interest rate
    comparison rate
    Monthly repayment
    6.90% p.a.
    n/a

    Enjoy a competitive rate on the initial balance that you request to be transferred to your bank account within 3 months of approval. Choose your repayments each month above the minimum payment due. Apply online in as little as 10 minutes. Only pay interest on the amount you have used, not on your whole credit limit. A one-off establishment fee of $249. This product is provided by National Australia Bank Limited, using certain trademarks temporarily under licence from Citigroup Inc.

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* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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