How to get a loan with a low credit score in Canada?
The creditworthiness of a person is determined by the credit score of the person. Generally, the person who has a credit score of 750 is considered to be good and every financial organization approves the loan with such a credit score. But the biggest question is what happens to the person who has a low credit score and whether such a person will be able to get a loan or not? Hence, in this article, we have come up with all the ways that help the person to get a loan in Canada even with a low credit score.
Ways to get a loan with a poor credit score
The following are some ways that help you to get a loan with a poor credit score:
- Every lender sets a cut-off score for approving a loan application and it generally varies from lender to lender. There is some lender who sets high cut-off in credit score for approving the loan whereas some lenders like Payday loan Canada approve a loan with low credit score but they charge higher interest from the borrower.
- Loans like personal loan, credit card loan, etc. are unsecured and theses type of loan can be availed even with low credit score since these loans charges high-interest rate. In the secured loan the lender has lower credit risk as such loans are backed by adequate collaterals with enough liquidity. But unsecured loans do not have enough collateral and thus the lenders are charges huge interests.
- Another great way to get a loan with a low poor credit score is to apply for a joint loan. You can also add a guarantor who has a good credit score. This will certainly improve your eligibility. Adding a guarantor or a co-applicant who has a high credit score reduces the risk factor of the lender since if the borrower cannot repay the loan then the lender can go to the guarantor for the repayment.
- Some banks and financial organizations conduct strict credit report examinations which may lead to huge inquiries to the borrowers. But financial organizations like Non-Banking Financial Companies (NBFC) can provide you a loan with a high rate of interest but do not inquiry too many things from the borrower. If you have a low credit score then you have to opt for such kind of loan.
- It may be difficult to get a loan of a huge amount with a low credit score. Hence if you have a low credit score then it is better to approach a loan for a small amount. Once you get a small amount you should repay the loan regularly so that you can build a good credit score. This way you can strengthen your creditworthiness and then eventually you can go for the bigger amount.
The Bottom line
Getting a loan with a low credit score can be hard but it does not mean that you will not get the loan at all. If you can manage and can repay your installment on time then you also have the chance to get the loan even if you have a low credit score.