Bad credit? Need a loan? It IS possible! | Refresh Financial

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Bad credit? Need a loan? It IS possible!

bad credit loan canada

If you're struggling with bad credit, and you're looking for a personal loan, chances are you've probably been turned down at any major bank you have approached. Banks are very unlikely to give out bad credit loans in Canada. What is considered a bad credit loan? Generally speaking, a loan given to anyone with a credit score below 650 (which is considered good and means that you are a low default risk and a better candidate for lending) is a bad credit loan from a banks perspective. Note that this number is just intended as a guide - different banks' requirements will vary.

Major banks, however, are not the only option when it comes to accessing personal loans. There are plenty of loan companies who are willing to issue bad credit loans, and GreedyRates.ca has a good list of those providers.

But - and this is a big BUT - with a bad credit loan in Canada, you are going to pay much higher interest rates. We're talking upwards of 25%-30% interest. And whatever you do, stay away from “payday loans,” which often have rates of several hundred percent!

Check out our loan calculators which will show you exactly how much a bad credit loan in Canada can cost you.

Ask yourself, do you really need the loan?

Before signing on for a bad credit loan, ask yourself if the loan is to satisfy a want, or a need. Do you want to buy a new TV, or do you need to pay bills this month? If you're looking for a loan to satisfy a want, and you have bad credit, please reconsider! You will pay sky-high interest rates for something that can wait several months until you have built your credit score.

If you are seeking a personal loan for a need, such as bill payments, groceries, or something else that simply cannot wait, first make sure you have exhausted all other options before getting a high-interest bad credit loan. Look at what expenses you can cut down on for the short-term to save money. For example, you could:

  • Stop eating out for a few months
  • Cancel your cable
  • Take one vehicle off the road

For more ideas to cut daily expenses, check out this blog. All too often, people go straight to a bad credit loan to solve short-term money problems rather than cutting back on their expenses. It's not going to be easy, but if you can manage without getting a loan, you'll be so much better off in the long-term.

Build your credit score and qualify for lower interest rates

Of course, the best solution is to invest the time into building your credit score so that you don't even need to look as far a bad credit loans. With a higher credit score you will qualify for much lower interest rates, making all purchases - wants and needs - that much more affordable.

Check out our custom credit building solutions. The application involves 4 easy steps and can be completed in under 20 minutes!

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