There’s no way to sugar coat it. If you have a poor credit rating, you’ll need to look for bad credit financing. Here are four things a person with a bad credit score needs to know about getting bad credit loans:
1. Make sure the information in your credit history is accurate.
Equifax Canada and TransUnion Canada are the two big credit reporting companies. But the reporting agencies and the creditors who report to them on your activities are far from perfect. Mistakes are made more frequently than you might think. By law, you’re entitled to one free copy of your credit report from each of the reporting agencies every 12 months. If either report contains inaccuracies or is incomplete, you have a legal right to challenge them.
2. You’ll probably get a break if you lean on someone you know.
Even if you can’t borrow directly from a family member or close friend, try to find one with a good credit rating to cosign for your loan. That way, they’re not out-of-pocket for the amount of the loan. The bank will take the cosigner’s score into account when deciding whether or not to give you credit, which should greatly increase your chance of being approved. Remember though, if you go into default on the loan, the cosigner will be on the hook for what’s owed.
3. Take out a high-interest-rate subprime loan [but only if it’s a matter of survival].
Most often, the thing a person can’t live without is a car. A car loan is a secured loan because you’re using the vehicle as collateral. If you fail to pay as promised, the dealer can simply repossess the car. A dealership, through a bank, will give loans for bad credit borrowers – even loans for borrowers with no credit history at all. However, you’ll have to pay a very high interest rate to get one. For additional resources, you may be able to learn more at the We Loan Money website.
4. Consider a short-term, fast-cash loan.
While short term cash loans come in different shapes and sizes, a person in need of emergency cash has essentially two choices: a car-title loan and a pay-day loan. A title loan is a secured loan where the borrower uses the title to his vehicle as collateral. A pay day loan is unsecured which means the money provider assumes more risk. The borrower will need to show proof of employment and will pay a higher interest rate than on a title loan.
Having a bad credit report doesn’t mean you don’t have options. But regardless of how you decide to proceed, its important to work on improving your score.