Good credit is a priceless financial tool for most Canadian consumers. Having good credit can help borrowers gain access to affordable credit products when they’re trying to finance big-ticket items such as a car or house. If you have poor or no credit, gaining access to these credit products can not only be difficult but a lot more expensive.
If you’re thinking about applying for a loan, whether it’s a mortgage, car loan or personal loan, it’s best to improve your credit as much as possible before applying. At Loans Canada, you can find a number of credit-building products to help you.
Get A Secured Credit Card
A secured credit card is one of the best and easiest ways to grow and improve your credit scores. It works just like any other credit card, except you have to provide a security deposit which will act as your credit limit. You’ll then be able to access your secured credit card to make purchases up to that credit limit, which you can reuse as you pay back the balance.
Once you start using your secured credit card, your credit activity will be reported to one or both credit bureaus in Canada (TransUnion and Equifax). If you use your secured card responsibly by making payments on time and in full, you’ll be able to build a positive payment history which can help improve your credit scores.
Will I get back my security deposit?
Secured credit cards do require the user to provide collateral in the form of a security deposit. But, this is often as little as $75 and will be returned should you decide to close your account (your balance must be repaid in full before you close your account to get your security deposit back).
Best Secured Credit Cards In Canada
| Annual Fee | Interest Rates | Min. Deposit | |
| Neo Secured Credit | $0 | - 19.99% - 26.99% - QC: 19.99%-24.99% | $50 |
| Capital One® Guaranteed Secured Mastercard® | $59 | 19.8% | $75 or $300 |
| Home Trust Secured Visa Card | 0$ or $59 | - 19.99% (no annual fee) - 14.90% (with annual fee) | $500 |
| Vancity enviro™ Secured Visa* card | $0 - $395 | 11.25% or 19.50 % | $500 |
| TD Cash Secured Credit Card | $29 | 27.74% variable APR | $300 |
Use A Savings Loan
For those who are looking to grow their credit scores and save for the future, a savings loan is a great option. Unlike a regular loan, a savings loan does not provide any upfront cash. Rather, you’ll make affordable monthly payments to your lender who will keep your money in a secure trust. Each payment you make will be reported to one or both credit bureaus, which will help you build credit. At the end of the program, the lender will return all your payments minus any interest and fees.
The great thing about the savings loan is that you’re not only growing your credit, but you’re also saving for your future. Whether you’re interested in improving your credit scores or want to build one from the ground up, a savings loan can help you.
Use A Guarantor Loan
If your bad credit has gotten to the point where you’re having trouble getting approved at all, a guarantor loan might be the right product for you. In this case, you’ll need a trusted friend or family member who has strong credit and finances to co-sign your loan. This means they take responsibility for the loan in the event that you start missing payments.
Benefits Of A Guarantor Loan
- Your credit report, scores, rating and history are not usually an issue during the application process. Instead, your cosigner’s credit profile will be examined to determine their creditworthiness.
- Even though your credit is not the primary focus, you can still improve your credit scores by making payments and building your payment history.
- The strength of your cosigner’s financial ability means you could potentially be approved for a more affordable interest rate.
Drawbacks Of A Guarantor Loan
- Since a guarantor loan is similar to most installment-based loans, making late or partial payments, or missing them altogether could result in penalty fees being added.
- If you miss payments, your cosigner will be held responsible for the loan. If they also fail to make payments, both your credit scores can be damaged.
Benefits Of Having Good Credit
Good credit, bad credit, credit scores, credit ratings, and credit reports, there is a lot to know about credit and sometimes it can be very overwhelming. The one thing you need to know for sure is, good credit can open multiple financial doors. Here are some benefits to having good credit:
- Easier To Get Approved – With good credit scores, you won’t have trouble qualifying for different credit products. Moreover, you’re more likely to get approved for a larger loan than those with poor credit scores.
- Get Better Interest Rates – The higher you credit score, the more likely you’ll qualify for lower interest rates.
Bottom Line
If you want to grow your credit score and are interested in one of the above options but aren’t sure where to start, we can help! We specialize in matching Canadians, across the country, with the best possible credit solutions.
