Do you want to borrow money? Lenders in Canada look at your financial history before deciding whether to advance you the money you wish to borrow or not. This information is usually in the hands of the credit bureaus. If you have a history of late payments and loan defaults, you are considered a risky customer and might not get a loan. Or if you don’t have any credit history, you are still under a risk. A credit score of below 620 is considered very poor, and you might not get a loan with it. Here are tips to get the bad credit personal loan in Canada. Let’s see what they are:
Avoid Payday Loans
You might get frustrated that your loan applications are being denied and seek assistance from quick cash lenders online or across the street who offer payday loans. Despite the fact that these options are no credit check loans, they can have a high APR and very short paying periods. Financial experts advise on avoiding such products.
Consider a Secured Loan
Bad credit is all about the perceived risk of default by potential lenders. However, you can increase your appeal to lenders by securing a personal loan by offering an asset to act as collateral. Such assets include cars, parcels of land or residential or commercial buildings. This creates confidence as lenders have assets that they can sell to recover their money in the case you are unable to pay up your loan.
Look for a Co-signer
If you get a co-signer before you apply for a loan, the lender calculates the interest based on the credit score of the co-signer. Therefore, you can get better interest rates for your bad credit loans if you have a co-signer with a good credit rating. Get a person who trusts that you will pay up the loan. If you cannot pay the loan, he or she will also suffer from the loan default too because of a drop in credit scores.
Consider Taking a Loan from a Credit Loan
A credit union is a membership-only financial institution. Unlike the banks, the credit union uses more than just the credit score to evaluate the eligibility for getting a loan. You can get bad credit loans as long as you have been a member of the credit union for some time and have shown your ability to pay.
Build Your Credit Score
If you do not need funds urgently, you can build your credit score before you apply for a loan. You can do this by paying up your outstanding debts, especially credit cards. Also, you should keep your credit utilizations in revolving credit and not applying for new credit. On time loan repayment, low credit utilization and not taking new loans can help build your credit score fast. You can also get small no credit check loans and pay them promptly to improve your credit score if you do not any credit card balances.