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While living in London is still more affordable than many of the other towns and major cities in Ontario and even the rest of Canada, the cost of living has been steadily on the rise. For example, an average home in London, Ontario now costs over $375,000.
It is things like this, as well as various other rising costs, that can often lead consumers living in London to run into financial issues. Soon missing a payment or two can lead to debt piling up, which can eventually have a negative impact on your credit.
While many people in London think bad credit prevents you from gaining access to the credit products you need, that isn’t actually the case. In fact, there are some situations where even borrowing money with bad credit is possible.
Take a look at this infographic to learn how your credit score is calculated.
What is Bad Credit?
But before we look at the borrowing options available in London for people with bad credit, we need to learn a little bit more about what bad credit actually is. In Canada, credit scores can range from 300 on a low end up to 900 on a high end (for more information about your credit score range, click here). Your credit score is impacted by a number of different things, including:
- Your payment history
- How much debt you owe
- The length of your credit history
- How often you apply for new credit
- The number of different types of credit you use
While every person or lender in London may have a different idea of what bad credit is, generally, it is anything under a score of 600 or so. If your score is below 600, you might have more difficulty getting a high-quality loan and lenders might utilize more strict terms. Each lender in London is different, so be sure to ask a lender about their policy on working with bad credit individuals before applying.
Also, it’s important to note that bad credit to one person might be great credit for another. For example, if you have been struggling with a 375 credit score for years, if you manage to increase it to 550, you will feel like that is a great score. However, if you are used to being around 800, falling to that same 550 likely means you’re struggling.
Did you know you have more than one credit score? Learn more here.
How Do People Get Bad Credit in London?
Now that you know a little about how to classify bad credit, just how do people in London find themselves with bad credit? Well, there are a variety of reasons. Of course, bad financial habits and using credit irresponsibly are among the most common reasons for bad credit. If you simply overspend frequently and cannot control how much you use your credit cards, you might find your credit score dropping if you miss payments. As a result, it is incredibly important to keep track of your credit usage and have a budget to know how much you can afford to spend. Getting yourself out of credit card debt is no easy feat, so try to nip that problem in the bud if you are able to.
However, bad habits and irresponsible spending aren’t the only reasons people can find themselves struggling with bad credit. Unfortunate things like job loss, an emergency and even a major injury can all eventually lead to credit problems. Unfortunately, bad credit is simply unavoidable sometimes.
Did you know that bad credit can affect your daily life? Learn more here.
Types of Loans for Those With Bad Credit in London
Finally, let’s take a look at the borrowing options available in London for those with bad credit. Thankfully, there are many different options for those who have less-than-perfect credit to still borrow the money they need. One of the most popular options in London is to get a loan from lenders that don’t check credit. No-credit check loans are simple to get but often come with a higher interest rate or more fees. The reason for this is because most consumers in London applying for bad credit loan are seen as high-risk borrowers.
Another option is to go with a secured loan. If you have something to put up as collateral, a secured loan can help you get an affordable loan with a suitable interest rate. Unfortunately, these also come with risk as you can lose whatever you put up as collateral.
What Out For Loan Scams
Of course, be sure to keep an eye out for loan scams. Many scammers in London will try and target those with bad credit and promise them a “quick credit fix” for a fee. No legitimate company will ask for fees upfront and if a loan or deal sounds too good to be true, it likely is (for more information about “upfront fee scams”, click here). If you feel uneasy about a loan, lender or program, it is probably best to avoid it.
While some people in London may go with the options we mentioned above, others might prefer to increase their credit first, and then apply for a standard loan. While it won’t happen overnight, increasing your credit score quickly is entirely possible. Ways to improve your credit score include:
- Using a secured credit card
- Making all of your payments in full and on time
- Using credit cards responsibly
- Not closing old credit accounts
- Not constantly applying for new credit
Whichever option you decide to go with, you can rest assured that no matter how good or bad your credit score is, there are lenders who will be willing to work with you.
Why all Canadians should be monitoring their credit, check this out.
The Best Bad Credit Loans For Your Needs
If you are in need of a bad credit loan, don’t hesitate to reach out to Loans Canada. We are confident we can help.