The Loans Canada team sits down with Gary Schwartz of the Canadian Lenders Association to talk about open banking.
How Loans Canada Can Help You Grow Your Credit
Loans Canada: The Country's Best Loan Comparison Platform
A good credit score has become synonymous with a healthy and thriving financial life, and while we think that it can be very easy to become fixated on having a perfect credit score, we also know that good credit is a priceless financial tool for most Canadian consumers. So, where do you even begin when you’re looking to improve a less than great credit score or need to start from square one? We have two great options for you.
Want to know what the Canadian credit score ranges are? Click here.
A Secured Credit Card
A secured credit card is one of the best and easiest ways to grow and improve your credit score. It’s simple and straight forward, which are two of our favourite adjectives when it comes to personal finances. A secured credit card isn’t a prepaid credit card. Just like any other credit card, you’ll have access to a credit limit that you can use, pay back, and then use again. Once you start using your secured credit card, your credit activity will be reported to the credit reporting agencies (in Canada there are two, TransUnion and Equifax). Responsible use of your secured credit card, this means making at least your minimum payments on time every single month, directly affects the health of your credit score. Use your secured credit card regularly and always pay the bill on time and you should see your credit score start to grow within as little as a few months.
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 you security deposit back).
A Credit Rehab Program
For those who are looking to grow their credit score and save for the future, a credit rehab program is a great option. Here’s how it works:
- Make affordable weekly payments into your rehab account.
- Your payments get reported to the credit reporting agencies.
- Gain access to the money in your rehab account at any point during the length of the program based on how much you’ve contributed.
- Watch your savings and credit score grow.
The great thing about the credit rehab program is that you’re not only growing your credit, you’re also saving for your future. This means that after you’ve worked hard to get the credit score you want, you’ll also a substantial nest egg to do with as you please.
Whether you’re interested in improving your credit score or want to build one from the ground up, a credit rehab program can help you.
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 to a trusted friend or family member who has strong credit and finances to co-sign your loan and take responsibility for it in the event that you start missing payments.
Want to know the requirements for becoming a loan guarantor? Find out here.
Benefits of a Guarantor Loan
- Your credit report, score, 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’ll still be improving your credit score with every good loan payment you make.
- The strength of your cosigner’s financial ability means you could potentially be approved for a more affordable interest rate than with traditional bad credit loan products.
Drawbacks of a Guarantor Loan
- Since a guarantor loan is similar to most installment-based loans, making late or short payments, or missing them altogether could result in penalty fees being added.
- If you continually miss payments for a certain number of months (this depends on your lender), your co-signer will be held responsible for the rest of the loan term. If they also start missing payments, their credit and bank account will also be damaged, putting you both through unmanageable debt, even legal consequences if you default for long enough.
Click here to learn more about guarantor loans.
What Good Credit Can do For You
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, good credit can open financial doors you didn’t know were possible and can provide peace of mind that you’re ready for anything the future has in store for you.
It will be worth all the hard work you put in, especially when you get…
- Offered better interest rates
- Approved for a larger loan
- Approved for mortgage to purchase your first home
What is bad credit? Get informed here.
We Can Help You Choose the Right Option for Your Needs
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.
Rating of 5/5 based on 1 vote.
Largest Lender Network In Canada
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest
goPeer is Canada's first consumer peer to peer lending platform and connects creditworthy Canadians looking for a loan with everyday Canadians looking...