Over 1 million Canadians end up with a bad credit every year. Having bad credit means it will be difficult to get approved for a credit card, take any kind of loan and sometimes even to get a job.
Loan approval in Canada on bad credit
It is likely that your chances of getting a personal loan will be very low when you have a bad credit but things are changing gradually. There are plenty of lenders emerging in Canada who are willing to approve personal loans with a low credit score. For instance, Lendforall is Canada’s first A.I. (Artificial Intelligence) loan matching services company. Our automation process matches consumer & business applicants with various Lenders and Financial Institutions. Our streamlined process also provides you the with ability to choose from a variety of lending institutions, with NO up-front fees and NO credit check! With our A.I. loan match making service, the possibilities are endless. For questions on loan products and financial services call us at 1-800-532-4505 or email us at firstname.lastname@example.org today!
How are bad credit loan providers compared to banks?
Your credit score and credit history is a big factor in determining your loan approval. Banks provide loans only to people with a high credit score. In that case, very few people would get approved for loans in the past. Today’s time has brought in various lenders who are willing to risk loaning money to people with bad credit. Canadians with bad credit can now apply to a range of private lenders for a personal loan in Canada. On the other hand, banks would limit themselves to people with high credit and excellent financial history. Let us look at what sets them apart.
- Alternative lenders compared to banks are even willing to approve loans to people with bad credit, a recent history of bankruptcy, collections, the delinquent account or a consumer proposal on your credit history.
- Most lenders for bad credit can be found online, as they do not require having a branch presence as banks do. They can risk lending to borrowers with bad credit without charging them high lending rates.
- Many lenders in Canada who approve loans on bad credit, in fact, do not even do a credit check. It is because they consider other factors to decide if they want to lend or not. A bank is hell bent on your credit score.
- Alternative lenders may charge you high at times if they lend money on a bad credit because ultimately they are taking a high risk compared to banks.
- Alternative lenders provide both secured and unsecured personal loans on bad credit in Canada.
How to prepare for a bad credit personal loan in Canada?
If lenders are not doing a credit check for your personal loan in Canada, be prepared to answer questions about other aspects of your life. Some of the questions that alternative lenders may ask you are as follows.
- Your average yearly or monthly income.
- Are you employed or self-employed and what is the size of your business?
- Do you have anyone to co-sign your loan?
- Are you currently bankrupt?
- How much debt do you carry as of now?
How will one benefit from a bad credit loan in Canada?
The following are the benefits of a bad credit loan in Canada.
- You can rebuild your credit score: After you have been approved for a bad credit loan in Canada if your repayments are on time and in full, your credit score gradually improves. You will qualify for better mortgage rates and unsecured credit cards once your credit score improves.
- Get better interest rates: Having bad credit means high interest rates though there may be some lenders who would be willing to offer low interest rates. Nevertheless, as your credit score builds up, you automatically qualify for better interest rates.
- You can borrow a large amount of money: Situation maybe you need a large sum in a short period. Unlike earlier times, how awesome is that with bad credit loans you can borrow a huge sum and pay off several smaller loans or credit card debts or handle an emergency.
Does one need to be careful when applying for a bad credit loan?
It is important to be careful when applying for a bad credit loan as the market has unreliable credit lenders. Please look for the following things when applying for a bad credit loan.
- Interest Rates: Always check on a lender’s maximum interest rate before applying for a loan because some lender’s charge unbelievable rates!
- Hidden fees: Check for hidden fees if any before signing on a loan.
- Penalties: Check for penalties in event you pay late or miss a payment or want to pay off your loan amount earlier than the anticipated date.
- Credit reporting: Make sure your lender is regularly reporting your responsible borrowing serves to the credit agencies as it helps to rebuild your credit.