How to Get a Personal Loan With Bad Credit in Canada
Bad credit is a burden, but it does not have to be an obstacle. Unpaid student loans, missed credit card payments or credit report mistakes are common reasons for a low credit score. If you have been turned down for a loan because of your bad credit history don't be discouraged. With a bit of effort and financial knowledge it is possible for someone with bad credit to get approved for a personal bank loan in Canada.
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Instructions
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Order Your Credit Report Order a copy of your credit report from each of the two top Canadian credit agencies Equifax and TransUnion. Canadians can receive one free credit report from each agency each year. A mail request is free. Instant credit card reports can be ordered online for a fee.
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Report Errors and Pay Off Existing Accounts Read your credit report to ensure it is accurate. Your credit report lists your credit history and is what lenders look at when considering your loan application. If there is outdated information or other mistakes, request a change from the credit bureau. You can add a statement explaining your situation to your credit file.
Reduce your debt-to-credit ratio by paying off outstanding debts such as your car loan, student loan and credit card accounts. Limit use of retail credit cards as they can be damaging to your credit.
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Ask Someone to Co-sign Your Loan Find someone to co-sign a personal loan for you. A co-signer agrees to be responsible for loan payments if you default. Paying off the loan on time and within the terms of the agreement will increase your credit score.
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A secured credit card may help you re-establish credit. Apply for a secured credit card from a trustworthy bank. You will have to deposit funds equal to your credit limit to get the card, but if you make payments on time, your card may convert to an unsecured credit card.
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Get a Direct Personal Loan Ask a friend or family member for a personal loan. Draw up a contract specifying the terms of the loan, including interest rate and loan due date.
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Tips & Warnings
Perseverance goes a long way to being approved for a personal loan if you have bad credit. Apply to several different banks.
Be cautious of subprime lenders who will issue you a personal loan with an extremely high interest rate. You are better off spending several months improving your credit and getting a loan with a lower interest rate.
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