How to Get a Personal Loan With Average Credit

You've checked your credit score. It's not terrible, but it's not great either. And now you're wondering: is this going to be a problem when I apply for a personal loan?

The short answer is no, probably not. But the longer answer is worth understanding, because your credit score is only one part of the picture, and how you apply matters just as much as the score itself.

What "average credit" actually means in Australia

Australia has three credit bureaus: Equifax, Experian, and illion. Each uses a different scale, which is confusing, but here's the important part.

On the Equifax scale (0 to 1,200), the national average sits at roughly 666. That falls inside the "Good" band (661 to 734). On the Experian scale (0 to 1,000), the average is around 620, which also lands in the "Good" range.

So if your score is somewhere in that zone, you're not below average. You are the average. And average, in credit terms, is considered good enough for most mainstream lenders.

Scores vary a lot by age, too. If you're under 25, a score of 550 to 580 is typical simply because you haven't had time to build a long credit history. That's not a red flag. It's just a short file.

What lenders actually look at

Your credit score matters, but it's not a pass/fail gate. Lenders assess your full application, and they're looking at several things beyond the number.

Income and employment. Can you afford the repayments? Lenders want to see stable income, whether that's a salary, regular contract work, or consistent self-employment earnings. Most want at least three to six months in your current role.

Living expenses. Since responsible lending rules tightened, lenders look closely at what you spend each month. They'll check your bank statements for recurring expenses, subscriptions, rent, and other commitments. The gap between what you earn and what you spend is your serviceability, and it matters more than your credit score in many cases.

Existing debts. Every loan, credit card, and buy now pay later account on your file counts against your borrowing capacity. A $10,000 credit card limit counts as $10,000 of potential debt even if you've never used it. If you have cards you don't use, consider closing them before you apply.

Your credit file, not just the score. Lenders read the detail, not just the number at the top. A single late payment from three years ago during a tough period is very different from a pattern of missed payments. Defaults, court judgements, and bankruptcy are serious. A thin file with one old blemish is not.

How your score affects the rate you're offered

This is where the numbers matter. As of mid-2026, personal loan rates in Australia range from around 6.5% p.a. for borrowers with excellent credit to 25% or more for borrowers with poor credit. The average rate quoted across all borrowers is roughly 13.9% p.a.

On a $20,000 personal loan over 5 years, the difference looks like this:

The difference between "excellent" and "average" is roughly $44 a month, or about $2,660 over the life of the loan. That's real money, but it's not a dealbreaker. And there are ways to narrow that gap.

The biggest mistake people make (and how to avoid it)

Here's something most people don't realise until it's too late: every formal loan application creates an enquiry on your credit file. That happens whether you're approved or not.

And lenders take those enquiries seriously. If a lender sees an enquiry on your file, they want to know what happened. Did you get the loan? If not, why not? Were you declined? They'll ask for proof, and some lenders treat an unexplained enquiry as a negative character reference. Even a single hit on your file can create questions you don't want to be answering.

Apply to two or three banks in a couple of weeks and the picture gets worse fast. Your score drops with each enquiry. The next lender sees a pattern and assumes you're being knocked back everywhere. What started as sensible rate shopping has turned into a red flag on your file.

The people most at risk are the ones with average credit who are trying to do the right thing: compare options and find the best rate. But going direct to lenders is the most expensive way to do that, because it costs you the one thing you're trying to protect.

This is exactly where a broker changes the equation.

A finance specialist can assess your situation, review your credit file, and give you honest advice on what you're likely to be eligible for, all without touching your credit file. No enquiry. No footprint. Nothing changes on your score.

If it looks like you're eligible, the broker doesn't just fire off an application and hope for the best. They'll workshop your situation with the lender first: explaining the context of any blemishes, presenting your income and expenses in the strongest way, and making sure the lender is comfortable before anything formal is submitted.

When the application does go in, it's one application to the right lender, with the strongest possible case. One enquiry on your file instead of several. And a much better chance of approval.

Think of it this way: a broker protects your credit file while finding you the right deal. Going direct to lenders costs you the one thing you're trying to protect.

Three things you can do right now

1. Check your credit file for free. You're entitled to a free report from each bureau once a year. Order yours from Equifax, Experian, and illion directly. Look for errors: wrong addresses, debts that aren't yours, or defaults you've already resolved. Disputes are free to lodge and corrections can shift your score meaningfully.

2. Close unused credit accounts. That store card you opened five years ago and never use? It's still sitting on your file as available credit. Every open account reduces your borrowing capacity. Close anything you don't actively need.

3. Talk to a broker before you apply anywhere. Don't go to a bank. Don't apply online "just to see." Every application leaves a mark. Start with a conversation that won't cost you anything or impact your credit file. Get a clear picture of where you stand and what your options are before a single enquiry hits your file.

What to do next

Check your credit file first. Fix anything that's wrong. Close unused accounts. Then, when you're ready to explore your options, talk to someone who can assess your situation and match you to the right lender without putting your credit score at risk.

If you'd like to see what's available, Emu Money's finance specialists compare options across 50+ lenders. The initial conversation has zero impact on your credit file, and we only submit when we're confident. Compare personal loan options.

Subject to lender approval, terms, and conditions apply.