If it’s not an emergency, the first step to get a loan with bad credit in Canada is to improve your score so you can comfortably afford the loan you need. Whether short term loans or personal loans for bad credit, Canada and certain institutions will be more welcoming if your score, and thereby your reputation, are strong.
Start by making timely payments, especially on your credit card and reduce the balance to under 30% of your limit. Don’t apply for new credit. These three factors account for 75% of your credit score so it is vital that you understand the impact they could potentially have on a strong credit score.
If it is an emergency however, there are measures you could take to get bad credit loans in Canada that do not involve banks, credit unions or even the alternative sources that we have already mentioned.
Approach Family and Friends
Risky in terms of rapport, but approaching family and friends is intelligent if you look at it from a monetary and stress perspective because it would be simpler to get approved and the terms would also be a little more lenient.
You can almost be sure that the people closest to you won’t subject you to the rigorous qualification procedure and would probably be gentler with the rate of interest compared to what lending institutions providing personal loans for bad credit in Canada would charge you.
However, if you get a loan for bad credit in Canada from your friends or family, ensure you take into account the possibility of default. Failing to pay someone close to you a loan can be toxic to relations and destroy lives. This runs deeper and further than a poor credit report.
With a loan received from a person you know, handle it like an important transaction between two people who don’t know each other. For all intents and purposes, make it official with clear documents and legally record it. Avoid problems down the road and draft up a written agreement including the terms of the loan, rates of interest, and what happens if the debt cannot be repaid. While you are getting a loan from a friend or family, you should not treat it as such.
Get a Co-Signer
If you cannot get a loan with bad credit in Canada from friends or family, you could always ask an associate to co-sign a bad credit loan with you.
Alongside a competent co-signer, those institutions providing the loan will value the interest rate depending on your co-signer’s score (the better score), but now the co-signer is equally liable for repayment. You can think of a co-signer as a sort of character witness. If you evade a loan or are late on payments then – because payment information is recorded on both credit reports – both you and your co-signer will face duress.
There is more responsibility on your shoulders because your actions have direct consequences for someone else. Although with punctual payments, you won’t need a co-signer in the future because your credit score will improve and getting a loan will be easier.
For example, if you need a short-term loan in Canada and bad credit is affecting your ability, Lending Mate provides you with up to $10,000 provided you have a guarantor. They have a chat over the phone with both you and your guarantor and make their decision based on what they find out and using common sense. It is a less taxing qualifying process when considering what certain institutions put you through when applying for personal loans for bad credit in Canada. But there is a lot more responsibility put on you.
Personal Loans Online
The rise of tech and a schism in the industry has created a space for Personal Loan Lenders, a new space that provides an avenue for those with poor credit scores.
These companies are essentially lenders without a physical presence. In our context, this means online loans in Canada. They go about their jobs online and offer online loans in Canada for bad credit scores when it comes to things like consolidating debt and loans for minor expenses. The reason they are so attractive is because they do their job quickly and have funds at the ready. Decisions take little or no time and the money you request reaches your account in a couple of days. Majority of these lenders do not charge for applications and they do not issue pre-payment penalties.
When considering online loans in Canada for bad credit, these agencies are your go-to. The request for a loan is intuitive and quick to complete. Credit scores play a minor role in the administrative process – if that – so this is an appealing option for people with bad credit. More factors that come into play include your education and employment history.
