📅 Last Updated: October 4, 2021
✏️ Written By Kale Havervold
🕵️ Fact-Checked by Caitlin Wood
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There are many incredible things about living in the Kitchener-Waterloo area, but they come with some potential costs. While some parts of the city are affordable, many others are not. This can make it difficult for the average person to buy a home or live comfortably. Some people certainly make enough to keep up with their expenses and lifestyle, but others do not.

This can lead to defaulting on loans, missing payments, and other financial issues. As you could imagine, this can negatively affect the credit score and report of a person. Thankfully, bad credit loans in Kitchener are available to help everyone, get the funding they need.

Credit Score Ranges in Canada

Before looking deeper at bad credit loans in Kitchener and what is available, we want to make sure everyone knows and understand how credit scores work in Canada. In Canada, credit scores range from 300 to 900. The higher your credit score, the less risky you will appear to borrowers and the better deals you will get.

But how is your credit determined? What goes into deciding whether your credit score is good and high, or poor and low? Well, in general, there are 5 different factors that go into coming up with your credit score. These are:

  • Payment history
  • Credit utilization
  • Length of credit accounts
  • New credit inquiries
  • Diversity of your credit

Each of these will have an impact on how good or bad your credit score is. You could make all your payments on time, but if your credit accounts are new and over-utilized, your score won’t be as high as it could. As a result, keep all of these factors in mind while using your credit card to ensure your credit score remains high.

Canadian Credit Score Ranges

What is Bad Credit?

So now that you know about the credit score ranges in Canada and how a credit score is calculated, what is considered bad credit? Well, while every lender may have their own thoughts on this, anything lower than a credit score of 600 is generally thought of as bad credit. Of course, bad credit can also be subjective and mean different things to different people.

For example, someone who is used to an 850 would think a 675 is a bad credit score. On the other hand, someone with a 400 credit score would think that same 675 score is great. Ultimately, it is all relative to the unique situation of an individual.

While a bad credit score obviously has a huge impact on your financial situation, it can also impact and affect your daily life as well. It can impact your ability to purchase a home, to get approved for emergency financing, to get certain jobs, to rent an apartment, get a vehicle, and so much more. Many think of a credit score as a purely financial metric, that isn’t the case, as it can have a massive impact on your entire life.

So while bad credit can impact various parts of your day-to-day life, it shouldn’t impact your ability to borrow money thanks to bad credit loans in Kitchener.

How Does Bad Credit Affect Daily Life?For more information about how bad credit can affect your daily life, click here.

What Causes Bad Credit?

With you now having the knowledge of what bad credit is, what causes it? Well, the first cause is simply having bad financial habits. Bad financial habits can include everything from not using credit irresponsibly, to spending more than you need, missing your payments, etc.

All of these mistakes or habits can contribute to your credit score taking a nosedive. However, it is not always bad or irresponsible habits that lead to bad credit. Sometimes, life can throw you a curveball which can hurt you financially and lead to the development of bad credit.

Other things that can lead to bad credit are:

  • Losing your job
  • Medical emergencies
  • Car accidents
  • Necessary house repairs
  • Injuries and more

These types of things can often be impossible to avoid and could happen to anyone. So if someone has bad credit, it would be wrong to assume they have made bad financial choices or have bad habits.

What are bad credit lenders looking for when approving loans? Find out here.

Types of Loans Available to Those With Bad Credit in Kitchener

Now that you are aware of bad credit, we can begin to look at the types of bad credit loans in Kitchener. In general, there are two different types of loans available to people with bad credit.

No Credit Check Loans

The first is a loan from a lender that doesn’t check credit. Of course, if a lender never checks credit, they will obviously not know about your bad credit and it won’t hurt your ability to borrow money. However, these loans can have high-interest rates and may not have the best and most flexible terms.

Secured Loans

The other type of loan available to you will be a secured loan. A secured loan is where the borrower will have to put something up for collateral, such as their car or home. This is in place to reduce the risk absorbed by the lenders, and to give the borrower a better loan. These will often have pretty good interest rates and terms but come with a lot of risk. If you default on these payments, you could lose whatever your collateral is. So if you utilize a secured loan, be sure to always make your payments on time and in full.

Also, different lenders are willing to work with different people, so don’t be scared to inquire with many lenders about if they are willing to work with you. The worst they can say is no, and taking time to shop around for the right lender could end up paying off in a huge way. You never know if a lender is willing to work with you or not until you speak with them.

20 different ways to secure a loan, check out this article.

Of course, be sure to watch out for scams. Loan scams are unfortunately common and they often prey on individuals with bad credit as they don’t have a lot of options. If you have no other option, you may be more susceptible to loan scams. When evaluating potential lending options, some warning signs of scams include.

  • Guaranteed approval
  • No physical address
  • Asking for upfront fees
  • They want you to “act now” or miss out on the deal

However, some loan scams are very well-hidden and you might not always see them coming or expect them. They might seem completely legit and normal. Simply put, always be vigilant because you never know when you might be dealing with a loan scam. Also, if things seem too good to be true or you feel uneasy about a lender or loan, it is best to listen to your gut.

How to Improve Your Credit?

While some might be okay with using bad credit loans in Kitchener, others may want to improve their credit. If you have better credit, you will typically have access to better loans with better terms and interest rates. You will almost always have a better chance of being approved for a loan if your credit score is high.

While it might seem impossible to increase your credit score in the position you’re in, that’s not the case. There are several different (and relatively simple) things you can do to increase your credit, such as:

  • Keeping your credit utilization low
  • Always making your payments
  • Using credit responsibly
  • Keeping old accounts open
  • Not constantly applying for new credit

Now, these types of habitual and lifestyle changes will improve your credit, but it won’t happen overnight. It is a process, not magic. But if you stick to your plan, be responsible and not let your credit card usage get out of control, you could see your credit score improve sooner rather than later.

Canadian Credit ScoreCheck out this infographic for more information about credit scores in Canada.

Credit Improvement Products Available in Kitchener

While some people are capable of using the above information to improve their credit, others may require a little more assistance. Thankfully, there are several different credit improvement products available for individuals in Kitchener.

Secured Credit Card

First of all, you could use a secured credit card. A secured credit card will allow you to build your credit with less risk. It acts like a normal credit card, only it is secured and therefore easier to get approved for if you have bad credit.

Installment Loan

Another credit improvement product you can utilize is an installment loan. Paying off a loan on time and in full can be one of the best and most effective ways to increase your credit score. It shows to lenders that you can carry debt and pay it off, which is something they are obviously quite interested in. Of course, make sure the installment loan you take out is one you can afford to pay back. If not, the loan could end up doing more harm than good to your credit.

While bad credit loans in Kitchener are a good option for many consumers, using some of the available credit improvement products will help you be well on your way to being able to be approved for more high-quality loans.

Finding the Right Bad Credit Loan For Your Needs

Struggling with your credit and need information or access to bad credit loans in Kitchener? If so, we are confident we can help. Don’t hesitate to reach out to Loans Canada, as we can help connect you with local lenders in your area to get you the loans or assistance you need.

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