Most people think that when applying for a loan, all that counts is having a high credit score in order to be approved. Having a good credit score is definitely good for you, but unfortunately that is not a reality for all Canadians. However, if you are in need of a loan and you do not have a high credit score, you can still get approved and get the money you need.
What is considered as a “Bad Credit”?
When you get approved for your first credit product, the lender will inform Equifax and TransUnion, which are both Canada’s credit reporting agencies. Those agencies will then proceed to collect all the information and combine it into a report. This report will show all your credit activities, like transfers for example, payments, accounts closed, etc.
The report mentioned above will contain three-digits. Those three digits will determine your eligibility in order to get a loan. Credit scores in Canada will range from 300-900. A credit score of 650 or higher is considered ideal in order to get a loan, as well to get better interest rates. The lower from 650 your report is, the lower are your chances of getting approved for a regular loan, and the rates tend to be higher as well.
What is a Bad Credit Loan?
A bad credit loan is just a regular loan for people that are struggling with bad credit. Having a credit score above 650 is not always achievable, so what can you do when your low credit score is stopping you from getting the loan you need?
Personal loans are the most popular types of loans among bad credit consumers. These loans can be used to cover a range of expenses, like groceries, home repairs, renovations etc. Bad credit loans are the same as personal loans, and they are installment-based.
A Bad Credit Loan might be the right option for you if you don’t have a favourable credit score and if you are struggling in getting approved with conventional lenders. Another advantage is flexible payment installments, so you will be able to determine the payments’ due dates. The last but definitely not the least, the approval rates for this type of loan are indeed high in Canada, because they have fewer requirements than regular types of loans.
Criteria to get approved for a Bad Credit Loan
Just because the application and the approval process for this type of loan is faster, it doesn’t mean that you don’t need to do your part as well in order to get approved. For example, be honest when filling out your application, and when communicating with your broker. Also, do your best to provide all the documents necessary for your application in a timely manner. Always responds your broker as soon as possible and make sure you are prepared to pay off your loan. Verify you are aware of all the fees and penalties involved if you skip payments.
If you are looking to refinance or purchase a home over the next few months, contact us today at 877-296-2696 or email us at info@homemortgageadvice.ca.