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📅 Last Updated: September 9, 2022 ✏️ Written By Bryan Daly 🕵️ Fact-Checked by Caitlin Wood
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Has your bank or other traditional financial institution in Newfoundland and Labrador been denying your loan applications because your credit is a bit worse for wear? While you can always take some steps that will help you improve or fix your credit score, there are plenty of situations where you might need a loan quickly and don’t have the necessary time. In that case, a bad credit loan in Newfoundland and Labrador could be a very beneficial option for you.
Need a personal loan in Newfoundland and Labrador instead? Read this to know more.
The Start and End of Bad Credit
Not sure what having bad credit even means? A good point of reference might be to take a look at your credit score, which you can either request for a flat fee from one or both of Canada’s credit reporting agencies (Equifax/TransUnion).
Your Canadian credit score is a collective average that represents your credit health. For most conventional lenders in Newfoundland and Labrador, a score of 650 or higher is where you should attempt to reach when you’d like the best chances of approval, coupled with the lowest interest rates possible. Once you’ve dipped below 620, however, you’ll be reaching the zone of bad credit and the level where many lenders in Newfoundland and Labrador will start to deny you. Even if they do accept your applications, they’ll still be giving you a higher interest rate than you would normally receive with good credit, costing you more over time.
How bad credit usually starts for consumers in Newfoundland and Labrador:
- A long history of defaulted (short, late, missing) loan or credit card payments
- Loss of employment or financial emergencies
- Too many hard credit inquiries (when you apply, these drop your score slightly)
- Undisputed errors found in your credit report
- A high credit utilization ratio (using more than 30-35% of your available credit)
- Damage from financial delinquencies (consumer proposals, bankruptcies, etc.)
For some information about bankruptcies in Newfoundland and Labrador, click here.
How you can end bad credit as a consumer in Newfoundland and Labrador:
- Make an effort to pay all your bills on time and in full
- Stay above your minimum payments whenever possible (credit cards, lines of credit, other revolving credit products)
- Don’t apply for too much new credit within a 12 month period
- Request an annual copy of your credit report, then review it for errors
- Dispute the errors you discover
- Keep your credit utilization below 30-35% (raise your credit limit if necessary)
Did you know that bad credit can affect all aspects of your life? Take a look at this infographic.
The Long-Lasting Effects of Bad Credit
If you haven’t already, you should start taking the proper steps to fix your bad credit. After all, lenders in Newfoundland and Labrador want to know, first and foremost, that you’re responsible enough to make all your loan payments on schedule.
Want to know what happens if you can’t make your loan payments? Find out here.
While some lenders in Newfoundland and Labrador don’t check your credit, prioritizing elements such as your income instead, others certainly will. So, when you apply, those lenders see your bad credit and bad debt payment history, assume it’s because you’re an irresponsible bill payer and reject your applications, thinking you’re unworthy of credit. If not, once again, they’ll give you a much higher interest rate, which could only land you in even worse debt if you don’t manage it properly. That debt can then lead to defaulted payment penalties, followed by heightened interest rates, damaging your credit even more and pushing your future approval chances further and further from view.
For a better idea of how ongoing debt will affect you, check out our debt timetable.
Getting Loans in Newfoundland and Labrador, Even With Your Bad Credit
If your credit score is below the 620 mark and your bank has already denied your applications, don’t give up. Improving your credit takes a lot of time and effort, and there’s a chance that you need that loan money sooner rather than later. In that case, there are tons of bad credit lenders all over Newfoundland and Labrador that have been established specifically for clients whose credit is in poor shape.
Credit products in Newfoundland and Labrador you can get with bad credit:
- Installment, personal and short term loans that require no credit check
- Secured credit cards (which have a security deposit equal to your credit limit)
- Credit rehabilitation savings programs
- Secured loans with collateral (assets such as your home, car, etc.)
- Loans secured by a co-signer
What to watch out for:
- High-interest rates for bad credit or no-credit-check loans
- Defaulting on secured credit card payments, resulting in further debt
- Defaulting on secured loan payments, resulting in possible loss of your assets
- Your co-signer becoming responsible for your payments if you default, which could result in heavy debt for them
- Scamming, fraud or identity theft
Check out how your credit score is calculated here.
Newfoundland and Labrador Loan Insurance Scams
Even if you’re desperate for fast cash, it’s always important to protect your financial information from those looking to take advantage of your bad credit situation. When you’re looking for a credit product of any kind, especially one for bad credit, always do as much research as you can to confirm that your potential lender is legitimate. Wondering how you can tell a legitimate lender from a fake one? Take a look at some of the basic warning signs below.
Loan scam warning signs:
- Your lender asks for “loan insurance” before approval – One of, if not the easiest way to spot a scam artist is when they request that you make a payment upfront to guarantee your approval, which they may call “loan insurance”. It’s just in case you default, right? Wrong! No legitimate lender is ever supposed to request a payment before approving you and depositing your loan funds. In fact, such demands are illegal in Canada.
- They don’t have a solid reputation – Any good lender in Newfoundland and Labrador and Canada in general, should have a reputation that’s backed by customer reviews, online presence and a page in the Better Business Bureau database.
- They won’t tell you all relevant information – A clever scammer will pull all the stops to get you to fork over your banking information and hard-earned cash. That includes manipulative sales tactics. Any legal lender is supposed to tell you all you need to know about the loan process, including the exact terms and conditions, as well as how much your loan will cost by the end of your payment period. If your lender in Newfoundland and Labrador is glossing over your questions during the loan process, or your loan application isn’t finely detailed, don’t give them any information.
For more ways of spotting a loan scam, watch this video.
Frequently Asked Questions
What kind of income is considered for bad credit loans in Newfoundland and Labrador?
Many alternative lenders across Canada — Newfoundland and Labrador included — will consider alternative forms of income when evaluating your loan application. These can include many forms of government financial programs such as EI, CCB, and CPP. In order to be considered as income, the lender will require you to submit documents to validate this income and will need to see it being deposited directly into your account every month.
How can I get a loan in Newfoundland and Labrador with no credit check?
There are many lenders who are willing to overlook bad credit and forego a credit check. Other financial indicators will be used to determine your ability to repay the loan. Your debt-to-income ratio, job stability and your overall financial health will be considered. By foregoing a credit check, these lenders are inherently taking on more risk, so a higher interest rate is to be expected.
How can I get a lower interest rate with bad credit?
In the long run, improving your credit score will no doubt get you better interest rates. In the short term, there are ways you can lower the rates your lender charges you despite having bad credit. For example, if you only recently started a new job, consider waiting before applying for a loan as this will be perceived as having better job security by your potential lender. Other options include securing your loan with collateral such as a vechile or home equity.
Loans Canada and Your Bad Credit
If you’re a Newfoundland & Labrador resident with bad credit or you want to prevent your credit from becoming bad using the help of a credit-building tool, make Loans Canada your number one source. Apply with us today and we’ll get you set up with the right lenders for all your bad credit loan needs!
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