Pros and Cons of Loans with No Credit

Are you in need of funds? Is bad credit preventing you from securing the cash you need to meet your financial obligations, or to deal with an unexpected emergency?

Having a poor credit score can make it difficult to secure a loan – but it’s not impossible. Many lenders offer loans for people with bad credit, that is, with a credit score of less than 500. And while these loans come with several key advantages, there are some drawbacks worth considering, too.

How to get a loan with bad credit

If you need to take out a loan – whether that be a home loan, car loan, or personal loan – but you have bad credit, you do have options. The best thing to do is to seek out a lender that offers no credit or bad credit loans. These types of loans are open to any- and everyone, regardless of their credit history.

Let’s take a look at the pros and cons of these types of loans.

The pros of loans for people with bad credit

Let’s start with the good. Here are some of the advantages of no credit loans.

  • Lenders do not take credit history into account

This is the number one advantage of no credit loans – when examining a loan application, the lender does not take credit history into account. This is quite different from conventional loans, in which your credit score plays a significant role in the approval process.

  • The approval process is usually quick

Because lenders streamline the application and eligibility criteria for bad credit loans, the approval process is much faster. The paperwork required is usually little more than an up-to-date bank statement, and application forms often take less than a couple of minutes to complete. What’s more, the approval rate is typically much higher – up to 80 or 90 per cent for some lenders.

  • Bad credit loans can help you improve your credit score

Perhaps you went through a financial rough patch in the past, and this had a detrimental impact on your credit score. You are now financially responsible but still can’t get approval for a conventional loan. Taking out a bad credit loan – and making your repayments on time – can give your credit score a much-needed boost.

The cons of loans for people with bad credit

Now, let’s take a look at some of the drawbacks of no credit loans.

  • Bad credit loans guarantee higher interest rates

Typically, if you get a loan with bad credit, you will pay higher interest rates. This is because, from the lender’s perspective, the agreement is high-risk as a borrower with poor or no credit is more likely to default on the loan.

  • Watch out for dodgy lenders

Dodgy lenders often target those with bad credit looking to secure funds. Keep an eye out for these kinds of untrustworthy lenders, as you may end up in all kinds of trouble.

Is a bad credit loan right for me?

Only you can answer that question. If you have weighed up the pros and cons, you should have a clear idea of whether or not a bad credit loan is the right solution. Just remember to only work with reputable lenders with a proven track record.

If you’re confident enough that you can manage a bad credit Loan responsibly, apply now!

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.


Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice –

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat