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Borrowing money is something almost every Canadian will have to do at one time or another. You may need to borrow for a home, for your education, to buy a vehicle, or even to cover an emergency. However, not everyone has access to the same deals when it comes to borrowing money. Whether you live in Brandon, Manitoba, or any other city across the country, you might not have the same access to loans as your neighbour.
While Brandon is considered one of the best places to live in Manitoba, plenty of people still struggle with their credit in the city. Having bad credit can make borrowing money more expensive and difficult. Thankfully, it doesn’t make it impossible. Bad credit loans in Brandon exist so everyone can still gain access to the funds they need to get by.
What is Considered Bad Credit in Canada?
Before we look at bad credit loans in Brandon and what is available, it’s important to understand what constitutes bad credit in Canada. An individual’s credit scores can range from 300 to 900. The higher your credit score, the safer you are to lend money to.
Because those with a high credit score are deemed less risky by lenders, they can often get access to lower interest rates, better terms, and can borrow more money. Having a bad credit score can sometimes make it difficult to find loans and could impact your life by preventing you from purchasing a home or new vehicle in some cases.
This credit score is determined by a number of different factors, which are:
- Your payment history
- How long you have had your credit accounts open
- The diversity of your credit
- How frequently you make new credit inquiries
- Your credit utilization and debt load
All of these factors are considered and mentioned in your credit report, and that information is all put together to get your credit score. It is simply a quick and easy way for a lender to judge how risky a potential borrower is.
Now that you know how credit scores in Canada work, what is considered bad credit? In Canada, bad credit is usually anything under 600 or so, though it varies. There is no dictionary definition, and each lender or company might have their own thoughts about what constitutes bad credit.
Also, bad credit can mean different things for different people. For someone who is used to having a credit score of 825, if they all of a sudden dropped to 650, they might consider that bad credit and be upset about it. However, if someone has been struggling with a score of 450 for a while, if their score were to rise to that same 650, they would see it as a huge improvement.
What Causes Bad Credit in Brandon?
So now you know what bad credit is, but what are the causes of bad credit? The most common and obvious cause of bad credit is bad financial habits. Bad financial habits develop over time and can absolutely ruin your credit score and financial situation as a whole.
Some types of habits that would qualify as bad would include overspending, using your credit without thinking, not paying your bills, and living beyond your means. All of these habits, and many others like them, have the potential to ruin your credit score quickly.
However, it is important not to judge someone for their bad credit as there are many other potential reasons for bad credit. For example, unpredictable or unforeseen life events can be expensive to deal with. This could be a loss of a job, a car accident, an emergency, major injury or medical issues.
These events are hard to prepare for, so it is totally possible that they can pop up and ruin your finances. As a result, try and always keep some money saved up in case of an accident or emergency, as it can help prevent you from going into debt which in turn can hurt your credit score.
Types of Bad Credit Loans Available in Brandon
Finally, let’s take a look at the types of bad credit loans in Brandon that are available. First of all, you have loans from lenders who don’t perform credit checks. If a lender doesn’t check credit, they won’t know or care if your credit is bad. However, most no credit check lenders will have fairly high-interest rates and strict terms due to the fact they will work with anyone.
Another type of loan you will have access to are secured loans. A secured loan is one where the borrower puts up some type of collateral. This could be a home, a car, or another asset that has value. This decreases the risk for the lender, which often allows them to offer a lower and more fair interest rate. If the borrower defaults on the loan, the lender can seize the asset. As a result, you need to be very careful when taking out a secured loan. Also, some lenders are simply willing to work with anyone, even those who have less-than-perfect credit. However, like with the lenders who don’t check credit, these lenders will often charge a fairly high-interest rate.
While most bad credit loans are legitimate, it is important to remember that loan scams do indeed exist. Loan scams will often target people with bad credit as they have fewer options and fewer places to turn to. Unfortunately, these loan scams have gotten quite advanced in recent years and can disguise themselves as legitimate loan offers.
Thankfully, there are still a few things that can act as warning signs for a loan scam. These include:
- Asking you to lie
- Promising automatic approval
- Asking for upfront payments or fees
- Trying to rush you through the process
- Having little or no online reputation and no physical address
Simply put, if something seems too good to be true, it usually is. If you feel uneasy about a loan or lender, it is best to steer clear of them.
Tips for Improving Your Credit
While some people are okay with using bad credit loans in Brandon, others will want to improve their credit to gain access to additional types of loans. Thankfully, there are indeed some great ways to improve your credit. Some of the best ways to build up your credit:
- Using your credit responsibly
- Always paying off your bill in full and on time
- Keeping old credit accounts open
- Not constantly applying for new credit
- Creating a budget and sticking to it
While these tips can surely help you improve your credit, it is important to remember that they won’t happen overnight. It can take months for you to see a difference in your credit. Remember, these tips aren’t magic, and it will take some lifestyle changes to improve your credit quickly.
The Right Bad Credit Loans for Your Needs
Have bad credit and are looking for the right bad credit loan in Brandon for you? If so, Loans Canada can help you compare lenders, read reviews, and ultimately choose the best option that meets your needs.
