Are you finding it difficult to get credit because you have a chequered credit history? Rest assured that you are not the only person in this position. Trying to get finance for property, investment or a car when you are a bad credit risk can be very frustrating and stressful.

Applying for a personal loan can be the answer to your financial dilemma when you seek credit but have a bad credit history.

How can you get branded as a bad credit borrower?

Many of us begin our working lives not really understanding the importance of having a very good credit history. This is something that we learn as we get older and wiser and begin to contemplate borrowing money for our first car, which we all normally do with a parent acting as a guarantor on the car loan application.

Maintaining a good credit history from the beginning, that means not making late payments, not defaulting on our first loan and other bills such as our mobile phones which are all recorded against our credit history, will make applying for a holiday loan or a home loan that much more easier.

Is there hope for a bad credit borrower to have a personal loan approved?

If you have had a history of bad credit then don't despair. You can begin turning your credit history around by beginning regular savings. Remember that while one financial institution may knock back your loan application, another may grant it.

With a regular income, stable job, regular savings and collateral, you can turn your bad credit history around. It also pays to be honest with the lender. If you have defaulted on loans in the past then they will be noted on your credit history and the lender will know about it.

What are the standard requirements so that a bad credit borrower can apply for a personal loan?

A bad credit history will certainly be a hindrance to loan seekers. You can't simply expect to walk into a financial institution and be granted a loan without working at improving your balance sheet.

The financial institution will need to be encouraged by regular savings and a regular income that shows your responsibility towards saving and indeed, showing the ability to repay a loan.

The majority of financial institutions will require you to show the following before granting you a loan if you have a bad credit history.

• Regular Income
• Full time Employment
• Regular Savings
• Payment of Bills on time
• Must be over 18 years of age

What usually happens to a bad credit borrower when he applies for a personal loan?

Unfortunately, as a bad credit borrower, you will be subjected to larger than normal interest rates. As we have all seen with the sub-prime mortgage fiasco in the United States, people need to borrow money, in this case for homes, they receive home loans at larger rates but then don't have the capabilities to repay them.

While the American banking system was rather liberal in granting these loans to anyone and everyone, the Australian banking industry is fair to say, a little more stringent when it comes to lending money.

As a bad credit borrower, you will be charged more than the average Joe when you seek a personal loan. This is because the financial institution is taking a risk because of your previous poor credit history.

The financial institutions don't want you to default on your loan, they just want the interest and loan amount repaid.

The bank will still need to be satisfied that you can make your repayments without suffering financial hardship before granting you a loan even though they are going to charge you more to do so.

What are the two categories of bad credit personal loans?

There are two types of bad credit personal loans available to consumers to take advantage of when seeking finance from a bank.

A secured bad credit personal loan will require you to provide collateral as a form of security against the personal loan. The bank simply can't and will not take a risk in lending money to some people who have an extremely bad credit history.

Make sure that you understand that the bank can sell your collateral to pay off your outstanding debt.

An unsecured bad credit personal loan does not have any risk for the borrower attached to it. However, for a bad credit finance seeker, an unsecured personal loan is generally for a limited amount.

A secured bad credit personal loan is a lot easier for you to have approved than an unsecured bad credit personal loan.

Improve your credit score and get your personal loan

• Pay your bills on time. One of the things that many lenders do is check the history of a person's mobile phone bill. If you can't make regular payments for your mobile phone then how will you be able to make regular payments for your personal loan?
• Begin a regular savings pattern. You need to show that you can pay off a personal loan should it be granted to you. The bank will want to know why you haven't saved any money and will ask why you can afford to pay off a loan when your bank balance suggests that you need every dollar earned to live on.
• Make extra payments. Improving your credit score will only save you money in the long run. Your next loan will be at a cheaper rate and your extra payments will ensure that your current loan is repaid at a faster rate.

Showing a solid work and savings history is paramount to helping you get a bad credit personal loan.