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Halifax is the provincial capital of Nova Scotia, with a population of just over 403,000 residents, around ¾ of whom live in the urban area of Halifax Harbour. Ranked as the 14th most populated city in Canada, some of Halifax’s main sources of industry include mining, forestry, natural gas extraction, fishing, and agriculture. While the area was first established as “The Town of Halifax” in 1749, the city itself was not officially labeled as the Halifax Regional Municipality until April 1st, 1996. With its southern coast situated on the Atlantic Ocean, Halifax enjoys a humid continental climate, giving it milder winters than many other places in Canada. It also has comfortable summers that make the city perfect for music and arts festivals. The Maritime Museum of the Atlantic is also a popular attraction in Halifax, containing an impressive exhibit of artifacts from the sunken Titanic.
For more information about loans, credit, mortgages and financing in Halifax, click here.
Loan Myths
Some notions that you will typically hear when you’re looking to apply for a loan in Halifax are the misconceptions that come with them. While the loan application process in Halifax does take some time and thought to complete, there are also many facts that have been skewed out of proportion over the years. Here are some of the most commonly heard myths that you might come across during the loan process:
- Credit scores are the only factor that a lender will consider before choosing to approve you for a loan. Actually, there are a number of things that lenders in Halifax look into before approving you, such as your credit report, financial and employment history, etc. Mortgage approval, for instance usually requires a more extensive background check. However, some lenders in Halifax might not check your credit score at all.
- Banks and other financial organizations are the only lenders in town. Not true. While banks are some people’s go-to spots for loans, there are plenty of other legitimate credit companies in Halifax
- Trying to pay off a loan right away is always the best option. It depends on your financial situation and the size of the loan you’re looking to get. Yes, paying for a loan quickly will ensure that you get out of debt faster. However, if you’re mortgaging a home, but only making an average income, it can be better to pay in moderation so that you have some money left for other essential expenses.
- Applying for multiple loans will give you a better chance of approval. Not necessarily. First of all, many lenders will pull your credit report, putting a “hard pull” notice on your file and causing your score to drop slightly. Applying for too many loans can also make you look financially unstable and desperate to get financing that you might not pay back.
- All lenders are legitimate and want to help their clients. Be especially careful with this myth. When you’re eager to finance something you need, it can leave you open to manipulation by scam artists who want to steal from you. Always check customer reviews and look up a lender in the Better Business Bureau database to see that they are reputable.
Preparing to Apply for a Loan in Halifax
One of the best things you can do to increase your chances of getting a loan is to have your finances and other necessary documentation in order before you apply. Disorganization and a lack of preparation on your part could result in your lender in Halifax becoming skeptical of your financial stability. After all, they want to ensure that their clients aren’t at risk of going bankrupt. For those reasons, it’s important to take the proper precautions before you apply, such as:
- Figure out how much you wish to borrow, and how much you can afford in terms of monthly payments. Remember, most lenders in Halifax are going to vary when it comes to their payment amounts and interest fees, so be sure you can afford what they will charge.
- Calculate your debt-to-income ratio. Weigh your current monthly income against what you will owe in debt payments. If the ratio is more than 30-35%, consider holding off on applying until you can save more or get a pay raise.
- Check your credit score. While not all lenders look at your credit score, checking it in advance is a good way to know whether you’re financially stable enough to afford the debt you’re taking on. A score of 650 or above is considered decent.
- Decide what kind of loan you’ll need. An “unsecured” loan is the kind that doesn’t involve collateral, like you would find with a credit card. A “secured” loan, like a mortgage or car loan, will involve collateral, meaning your asset will be seized if you fail to pay. Just remember that failure to pay an unsecured loan can result in a collection agency taking legal action against you.
- Compare and contrast loans online. There are a number of different loan types out there for any number of financial situations. Make sure you do research beforehand and figure out exactly what kind of loan you need.
Check out this article to learn more about Canadian credit score ranges.
Loans and Your Credit Score
Another important factor to take into consideration is how your loan in Halifax is going to affect your credit score. First off, know in advance whether or not your lender will pull a copy of your credit report before you apply. When someone besides yourself looks at your report, it’s known as a “hard pull”, which will show up in your credit history and decrease your credit score slightly. Too many lenders doing multiple hard pulls is bad for your score.
Want to know how you can get a free yearly copy of your credit report? Try reading this.
Once you’ve been approved for your loan, the payment process will also have a different effect on your score. For instance, if you’re managing your loan payments properly, meaning you’re paying them fully and on time, your score will improve. On the contrary, if you’re being irresponsible and not paying your debts on schedule, your score is going to drop and ruin your credit.
However, if you don’t have a high credit score before applying, you don’t have to worry. As we mentioned above, many lenders in Halifax will not even check your credit score. What they’re really searching for are any risks that you will end up in a financial crisis. If you go bankrupt and are unable to pay them back, they will lose money. If this is a strong possibility, they might not lend to you. But, if they see that you’re in good health financially, your chances of getting approved are much better, no matter what your credit score is. Just make sure that your lender is reporting your progress to at least one of Canada’s major credit bureaus (TransUnion or Equifax). A loan is a great tool that you can use to build your credit!
Looking for some ways to improve or fix your credit score? Check this out.
F.A.Qs
- How can I get approved for the loan I need? There are a number of steps you might want to consider before you apply, including, but not limited to:
- Getting a copy of your credit report and credit score. Doing so is a good way to assure yourself that you’re in good financial health.
- Taking your time and shopping around for the right lender in Halifax to meet your needs. Make sure they are legitimate and have reasonable interest rates.
- Looking into online lenders beforehand. Every lender will vary when it comes to their rates and policies. An online lender might work better for you.
- Getting all your financial information ready to go. Organization is key to receiving an approved application.
- Most importantly, paying your prior debts is essential. A lender will most likely not want to give you a loan if you’re already in debt to a bunch of other sources. Need some debt management tips? Look here.
- My credit score is not as high as I would like. Will I still get approved? With the exception of most banks, you will still get approved, as long as you have been and continue to be in good financial standing. A favorable credit score is not essential to all lenders in Halifax. Can you get a loan with a credit score of 450? Click here for the answer.
- Will my credit score be affected by my loan? Yes! As we mentioned in the previous section, the way you’re managing your loan will have an effect on your credit score. Failed/late payments will equal a drop in score, while punctual/full payments will improve it.
- I can’t decide if a credit card or a loan is better. Which one should I choose? This will depend on the size of purchase you’re looking to finance. For example, most people cannot afford larger expenses like houses and cars right off the bat, so a loan will help them along. For smaller purchases that can be paid for with an average monthly paycheck, a credit card can be better. Here are some lessons to learn when you’re a credit card user.
- Can I still apply for a loan if I don’t have a credit history to show for it? Don’t worry, having a credit history just means you’ve made use of a credit product in the past, like a credit card. While using credit in a responsible manner is always good for your finances, you don’t necessarily need one to be approved for a loan. Is it better to have a no credit history or a bad one? Find out here.
- My application was just rejected by my bank. Why? Most major banks in Halifax will have different policies when it comes to their lending process. Unlike some lenders, banks will indeed check your credit score. They also already have a record of your financial history. So, if your credit score is low or you’ve had debt issues in the past, it might stop you from getting their approval. Read this to know how your payment history affects your credit score.
- I went to another lender, but they asked for a security deposit. Do all lenders do this? No! Watch out, because any lender that asks for a deposit before they approve you is trying to scam you out of your money. It is illegal for a lender to ask for payment before giving you a loan. If they try, don’t give them any information and walk away immediately. They might call this deposit “loan insurance” in an attempt to fool you. Don’t fall for this scam!
- Once I’ve found a legitimate lender, how long will it take for my loan to arrive? Certain loans can take 24-hours to several business days to be received. Just make sure to provide them with all the required financial information and fill out your application properly.
- Once I have my loan, can I go off schedule and make early payments? Most lenders will not allow you to pay ahead of schedule because of their interest rates. If your lender does allow early payments, they may charge you extra, so make sure to ask them.
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