How to get student loans for bad credit approved in Canada
As the title suggests, this article is helpful for you, only if you are a citizen of Canada. If you have a bad credit history and a poor credit rating, then you may face trouble securing a student loan. But bad credit is not the end of the world- you can still secure a student loan for yourself, provided you are willing to research and explore your options.
Here are a few tips on how you can get a bad credit student loan:
Recheck and Research
The first step, and the most important one, is to check and recheck your credit history. Ensure that all the information in your credit report(s) is accurate. If any outdated information is present and is negatively affecting your credit rating, then you can request an update from the bureau. You can also look into what attributes the lenders are looking for, and check whether you qualify for any kind of a loan.
The government of Canada has provided a publication (it’s free) for people facing similar problems as you. You can check sample credit documents, reports and understand them with the help of the publication. There are many useful tips on how to improve and build your credit rating in the publication as well.
Local Banks and Major Banks
Visit your local bank or any major bank and fill out a student loan application. Talk to the manager and explain your situation to him. It is likely that you will be turned down because of your bad credit rating, but it doesn’t hurt to try! If it doesn’t work, then you can look into other options given below.
Major Banks and financial institutions aren’t your only option. There are quite a few lenders specializing in bad credit loans. But because the lender will be taking a risk in giving you a loan, he will expect a much higher interest rate from you in return (to help balance out the risk factor involved).
Bad Credit Loans Afforded to Students- Facts
Because you have a bad credit rating, you will have to pay a much higher interest than a person with a good credit rating. In addition to this, the total amount of money you’ll be able to borrow will be less than what a person with a perfect credit rating would be allowed to borrow.
There are two types of bad credit loans: i) secured bad credit loan and ii) unsecured bank credit loan.
A secured bad credit loan is afforded to you when you can provide an asset owned by you as collateral (for example you own a piece of land somewhere). This is a risky loan to take, because you may lose your property if you’re unable to make payments. You should check all the risks involved before trying for this loan.
An unsecured bad credit loan is almost impossible to get- you don’t have to offer any collateral, and so it represents a great risk to the lender.
If none of the things stated above work for you, then you can get a cosigner to help you get a student loan (with better terms and rates).