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Even after trying your best to pay all of your bills by their due date each month, it’s still possible that you miss a deadline or completely miss a payment altogether. Or maybe you’ve had to max out on your credit card (or multiple credit cards) in order to cover an expense that has crept up on you.
Regardless, certain financial behaviours can wreak havoc on your credit score, causing it to dip down to levels that make it tough for you to secure new loan or credit accounts in the future.
Having bad credit can be a real nuisance. It can be incredibly frustrating and discouraging to be turned down for various financial products because your score is under a certain level. And if you find yourself needing a loan desperately because of a large expense that has come your way, securing a conventional loan might be tough.
The good news is, there are bad credit loans available in Hamilton if good credit is not a trait you possess. Keep reading to find out more about bad credit loans and how they may be your go-to source for funds when your financial profile isn’t at its best.
Take a look at this infographic to learn more about what affects your credit score.
What is Bad Credit?
Bad credit simply means having a credit score that’s lower than what most conventional lenders in Hamilton require to get a loan or line of credit. Generally speaking, bad credit is any score that’s less than 600.
With a score under this threshold, many aspects of your life could be affected. Here are just some of the things that you may have trouble getting with bad credit:
- Mortgages
- Credit cards
- Personal loans
- Car loans
Having bad credit can also make it hard for you to:
- Get a job
- Land a cell phone contract
- Get a utility contract
- Secure a lease on an apartment
There are various facets of life that can be disrupted as a result of having bad credit, so taking the time to improve your score if it’s under the 600 mark is your best bet. But in the meantime, there are bad credit loans in Hamilton that can help if you’re really in need of some financial help.
What are bad credit lenders looking for when assessing eligibility? Find out here.
Canadian Credit Score Ranges
In Canada, credit scores range from 300 to 900. A score of 300, signifies a consumer is just getting started with building their credit, while a score of 900 is considered perfect. The higher the credit score, the better.
With a higher score, consumers in Hamilton are more likely to get approved for all types of financial products and are also able to secure the lowest interest rate possible. A lower score, on the other hand, has negative consequences, as noted above.
A credit score of 650 would be considered an average score and is the minimum needed to get approved for most loans and credit lines. Any less than 650 would make it tougher to get approved for these financial products.
For more information about what your credit score range means? Click here.
What Can Lead to Bad Credit in Hamilton?
Nobody intentionally tries to get into bad credit. Sometimes consumers in Hamilton may find themselves in financially dire situations that cause their credit scores to plummet, while other times consumers may simply be negligent with their spending and other financial habits.
Here are some situations that can inevitably lead to a bad credit score:
- Overspending
- Taking out too many loans
- Adding too much debt to the books
- Neglecting to make payments on time
- Maxing out credit cards
- Losing a job
- Taking a pay cut
- Suffering an injury that leads to the inability to continue working
What Types of Loans Are Available For Bad Credit Borrowers in Hamilton?
If you have bad credit, you may have found it very difficult to secure a loan from a traditional lender in Hamilton. Conventional loans tend to come with strict lending criteria, including the need to have good credit. But if your score is less than the minimum required as per your lender, you may find yourself unable to secure a traditional loan product.
What then? Is it time to throw in the towel when it comes to getting a loan?
Not necessarily. While conventional loans might be better suited for those with good credit, there are plenty of bad credit borrowers in Hamilton who still need to come up with money to cover the cost of a large, pressing expense. In this case, there are other options aside from relying on the bank or other financial institution for a loan.
No-credit check loans – There are many alternative lenders available in Hamilton who deal specifically with bad credit borrowers whose credit scores are considered less than par. These lenders may not even check your credit score at all, and instead look at your income, job status, bank account, and most recent financial activity.
It’s much easier to get approved for bad credit loans Hamilton from lenders who don’t do a credit check. Just keep in mind that you will probably be paying much more in interest for these types of loans than you would with a conventional loan.
Secured loans – A loan that is collateralized by a valuable asset is much easier to get approved for. That’s because the risk level is much lower for lenders because they have something of value to repossess if you ever stop making loan payments. Secured loans can use all sorts of valuable assets to back up the loan, including your home, car or equipment.
For 20 different ways to secure a loan, check out this article.
Be Wary of Loan Scams in Hamilton
While there are plenty of reliable and trustworthy alternative lenders in Hamilton who work with bad credit borrowers, there are some who are predatory in nature. Their goal is to scam unsuspecting victims by encouraging them to take out a loan amount that they cannot afford to pay back.
Keep an eye out for any one of the following warning signs:
- Demanding insurance be paid
- Requiring upfront payments and fees
- Charging exorbitant interest rates
- Dealing only with wire transfers and not bank account deposits
- Guaranteeing approval
Did you know that bad credit can affect your daily life? Check this out to learn more.
How to Increase Your Credit Score to Boost Your Chances of Securing a Loan in Hamilton
If you need a loan right now, then opting for a loan from an alternative lender or considering a secured loan might be your best bet. But if you have some time before you really need to take out a loan, you might want to use that time to improve your credit score.
There are several things you can do right now to give your credit score the boost you need:
- Pay all your bills on time
- Pay your bills in full
- Make more than your minimum monthly credit card payments
- Pay down your debt balances
- Keep your credit card balances low
- Keep unused credit cards open
- Don’t apply for any new loans or credit cards
- Check your credit report for errors and have them repaired (if you find any)
Credit Improvement Products Available in Hamilton
In addition to the change in habits that you make in your financial life, there are also certain products available in Hamilton that can help you give your credit score a boost:
Secured credit card – Unlike an unsecured credit, a secured credit card is one that requires collateral upfront. In this case, the collateral would be in the form of a monetary deposit that you make when you take out the card. That amount essentially becomes the credit limit that you can’t exceed, similar to what your credit limit would be on a traditional unsecured card.
These are easier to get approved for because they have collateral to back them up and reduce the risk to the creditor. If you use this card wisely and make your bill payments on time and in full every month, you can effectively improve your credit score over time (for more information about this, click here).
Credit rehab savings program – This type of program lets you save your money while rebuilding your credit score. You won’t be given a lump sum of money upfront, but you can still get access to your savings throughout the loan term as you continue to put money away.
Are Your Struggling With Bad Credit?
Whether you’re looking for a bad credit loan in Hamilton or are considering applying for a conventional loan after taking the time to improve your credit score, Loans Canada can help. Call us today and we’ll connect you with the right lender who can provide you with the right loan type for your situation!
