Taking out loans is something most of us will need to do at some point in our lives, whether it’s a car loan, mortgage, credit card, or personal loan. Securing a loan is typically not a problem if you have a high credit score, But with bad credit, you may find yourself struggling to get approved for a loan.
But how low is too low when it comes to credit scores and getting a loan? More specifically, can you get a loan with a 450 credit score?
Key Points
- A credit score of 450 in Canada is generally considered ‘poor’.
- With a 450 credit score, you may have more difficulty securing a loan, though it’s still possible.
- You may need to work with an alternative lender if you have bad credit.
What Is Considered As Bad Credit In Canada?
In Canada, a bad or poor credit score usually ranges anywhere from 300 to 559. So, a credit score of 450 would fall under the ‘poor’ credit range.
The following chart outlines different credit score ranges and their associated credit rating:
| Credit Score Range | Credit Rating |
| 760+ | Excellent |
| 725–759 | Very Good |
| 660–724 | Good |
| 560–659 | Fair |
| 300–559 | Poor |
Can You Get A Loan With A 450 Credit Score?
A 450 credit score is considered poor, which can make it very difficult for you to secure a loan from a traditional bank or financial institution. Lenders consider a low credit score as a high risk and may be unwilling to extend a loan as a result.
However, there are still some potential options available, including bad credit loans from alternative lenders. That said, these types of loans often come with much higher interest rates.
What Is A Bad Credit Loan?
A bad credit loan is a loan that is accessible to those with bad credit who may have difficulty getting approved for loans with big banks. Conventional lenders like banks or credit unions may hesitate to approve loans for individuals with bad credit scores.
Bad credit loans offer a financial solution for these types of borrowers to access funds that they otherwise cannot secure through traditional means, though they typically come with less favourable characteristics, including the following:
- Higher Interest Rates. Borrowers with bad credit are considered high risk in the eyes of lenders. To offset this risk, lenders charge higher interest rates. This makes bad credit loans more expensive compared to standard loans.
- Smaller Loan Amounts. Again, the higher risk associated with bad credit loans often means more limitations on the amount available to borrow. Lenders may choose to cap the amount they lend to bad credit borrowers to minimize their risk, particularly if the loan is unsecured.
- Shorter Loan Terms. Bad credit loans typically have shorter repayment periods, which means you’ll have to repay the loan faster. This typically translates into higher monthly payments.
What Are The Different Types Of Bad Credit Loans?
There are several types of bad credit loans in Canada, including the following:
Personal Loans
Many alternative and private lenders will offer standard personal loans to those with bad credit. While it may not be possible with a big bank, many personal loan lenders offer up to $35,000 or more.
Interest rates on these loans are often higher, which can be as high as ~ 46.97% APR.
Secured Loans
A secured loan often has lower rates compared to unsecured loans, but you will need to back the loan with collateral, such as your home or your vehicle. While a secured loan may be easier to qualify for if you have bad credit, they’re also more risky if you fail to make your loan payments. If this happens, you could potentially lose your collateral.
Guarantor Loans
If you don’t have any collateral to offer, but you’d still like to avoid the high interest rates that come with an unsecured loan, you can apply for a guarantor loan. With a guarantor loan, a co-signer would agree to take responsibility for your payments if you can’t afford them. This can help you qualify for lower interest rates and higher loan amounts.
Moreover, a guarantor can be extremely beneficial because it will allow you to access a loan without your own credit being checked. Instead, the co-signer’s credit will be checked instead. You’ll be able to build and improve your credit as long as you’re making payments on time and in full.
Payday Loans
Another option for bad credit borrowers is a payday loan, but this option should be a last resort. Payday loans are easy to qualify for and provide access to fast cash, which can come in very handy. However, these loans come with extremely high interest rates and very short repayment terms.
Can You Get A Credit Card With A 450 Credit Score?
Getting a credit card with a credit score of 450 can prove difficult. Most lenders require average to excellent credit. However, there are other options available, including secured credit cards.
You can use a secured credit card just like a regular card for purchases. Moreover, some secured credit cards offer a points system and other benefits like a regular credit card. However, you’re not spending on credit with a secured card. Instead, you’ll be required to make a deposit, which serves as the credit limit on the card.
Secured cards are easy to qualify for, and if you make timely payments every month, you can steadily build a good payment history which can help you build your credit.
Best Secured Credit Cards In Canada
If you’re looking for a secured credit card to add to your wallet, consider the following:
| Annual Fee | Purchase Interest Rates | Min. Deposit | |
| Neo Secured Credit | $0 | - 19.99% - 29.99% - QC: 19.99%-24.99% | $50 |
| Secured Tims® Mastercard | $0 | - 20.99% – 26.99% - QC: 20.99% – 24.99% | $50 |
| Home Trust Secured Visa Card | 0$ 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 |
Can You Get A Mortgage With A 450 Credit Score?
Getting a mortgage with a 450 credit score in Canada is very challenging, as most lenders require a score of at least higher credit scores for mortgage approval. Major banks and credit unions typically require a credit score of at least 660 and 680, though the minimum depends on the specific lender. As such, a credit score of 450 is well under this threshold.
With a credit score of 450, you’ll likely need to work with private or subprime lenders, who are more flexible than traditional banks and may consider a lower score for mortgage approval. However, you can expect higher interest rates, larger down payment requirements, and stricter terms.
Can You Get A Car Loan With A 450 Credit Score?
Yes, it’s possible to get a car loan with a credit score of 450, though it may be more difficult. Further, there are many important considerations to make, including where to find a car loan lender who works with bad credit borrowers, interest rates, and down payment requirements. Again, you may need to work with an alternative lender to get a bad credit car loan, and expect the loan to be more expensive and less flexible.
What Do Bad Credit Lenders Look At Instead Of Credit Scores?
Many online lenders that offer bad credit loans don’t pay any mind to your low or bad credit. Instead, many of them will look at other factors, such as your:
- Income
- Debt level
- Employment
- Equity
- Collateral/assets
They may also look at your overall financial health, life situation, and reason for the loan to help them in their decision-making process.
What Can You Use A Bad Credit Loan For?
Just like a standard loan, you can use a bad credit loan for anything you need. Whether it is for an emergency, a car repair, to cover this month’s bills or anything in between, a bad credit loan is a versatile credit product that can help cover any cost.
Keep in mind that just because it’s possible to get a loan when you have bad credit, it doesn’t mean you should. Regardless of your credit, loans can be expensive, and you should only get a loan if you need it and not just to have some extra cash kicking around.
Why Do People Require A Bad Credit Loan?
No matter your financial situation, emergencies can pop up and throw life into a financial mess. In cases like these, loans can be extremely helpful, as they allow you to cover the expense without having to pay the entire amount upfront. Unfortunately, bad credit can sometimes disqualify you from getting approved for certain types of loans.
Many Canadians with bad credit rely on alternative lenders who specialize in working with bad credit borrowers to get the loans they need.
What Are Other Effects Of A 450 Credit Score?
Not only can it be more difficult to get approved for loan products at lower interest rates and better terms, but bad credit can also negatively impact you in other ways:
Employment
Depending on the type of job you’re applying for, a bad credit score could stand in the way of getting hired. Some employers, particularly those looking to fill job positions that deal with finances or sensitive information, may pull your credit report as part of the application process. A bad credit score could be a deterrent.
Insurance
Your credit score could be indicative to how likely you are to pay your premiums and file a claim. A higher score is perceived as lower risk for insurance providers, so they may offer lower premium prices and more comprehensive coverage as a result. A bad credit score, on the other hand, can have the opposite effect.
Cell Phone Plans
Cell phone providers may check your credit to determine whether to approve you for a cell phone plan if you intend to finance your device. With a 450 credit score, you could have more trouble securing a post-paid plan.
Apartment Leases
Many landlords conduct a credit check on lease applicants as part of the application and screening process. A credit score of 450 could mean that you may be more likely to pay your rent late. In this case, you may have more difficulty getting approved for an apartment lease.
How To Improve A 450 Credit Score?
There are multiple ways to improve your credit score:
Make Your Payments On Time
Those with credit scores of 450 may lack a positive payment history. Paying your bills on time every month is a good first step in improving your credit scores.
Reduce Your Debt-To-Credit Ratio
Your debt-to-credit ratio is another common factor used to calculate your credit scores. If you’re carrying a lot of revolving debt from month to month, it may be negatively affecting your credit. Paying your bills and reducing your spending will help reduce your credit utilization ratio, which may positively affect your credit.
Use A Credit Builder Loan
Some companies offer credit builder loans designed to help low-credit borrowers rebuild their credit. For example, KOHO’s Credit Builder Program involves taking out a line of credit where KOHO sets aside a certain amount from the credit line every month and reports these payments to Equifax. This can help you steadily build good credit.
Become An Authorized User On Someone Else’s Credit Card
By becoming an authorized user of a creditworthy person’s credit card, you can take advantage of their good credit and timely credit card payments to boost your score. You don’t need to use the card; simply being named on the account can improve your credit score if the account is in good standing.
Check Your Credit Report For Mistakes
Get a copy of your credit report and scan it for inaccuracies. These mistakes, if found, could be pulling your credit score down. If you spot any, report them to the credit bureaus and have them fixed right away.
Bottom Line
Even with a less-than-perfect credit score like 450, you can still get a loan, but it will be very challenging. While banks may turn you down, there are private and subprime lenders who may be willing to work with bad credit borrowers. Just be wary that you’ll pay much higher interest and may not qualify for high loan amounts.
