Improve your credit with a bad credit loan

October 20, 2022 Olivia Jackson

 

Many people struggle to keep up with the financial demands of life. If you’re finding it difficult to maintain control of your debt while balancing everything else life throws your way, you’re not alone. According to the MNP Consumer Debt Index, almost half of all Canadians (45%) are not confident they’ll be able to cover all living and family expenses in the next 12 months without spending on credit. 

You try your best but sometimes:

  • You can’t always make a payment on time
  • You only make the minimum payment on your credit card because you have other financial priorities that month
  • You carry a high balance on one of your credit cards

All these things affect your credit score and your ability to qualify for a loan. 

This means traditional lenders may not be an option when you need to borrow money for important things such as home or auto repairs, dental bills, or if you just need a little financial relief.

Understanding how lenders determine whether or not you qualify for credit is the first step toward fixing yours and graduating to lower interest rates.

What is bad credit in Canada?

Banks and other lenders look at your total financial picture to determine whether or not you qualify for a loan. Before they can approve you for their best interest rate, they look at things like:

  • How often you pay your bills on time
  • How much you already owe
  • Your income compared to your debts
  • Your credit score

As you can see, it’s not just one thing that can block you from getting the loan you need. It’s a combination of how much you owe and how good you are at paying it off.

Now that you know why some people get turned down for a loan, you can take the right steps to restore your credit and get back to qualifying for better rates soon.

Fixing bad credit

A bad credit loan can help you build good credit over time. Here’s how it works:

  1. You borrow an amount of money that you can comfortably afford to pay back over time. A loan calculator can help you determine the right amount.
  2. You work with your lender to personalize a payment schedule that fits your budget and makes it easy to make every payment on time. 
  3. With each on-time payment, your bad credit starts moving closer toward good credit.

After you’ve paid off your bad credit loan and made every payment on time, you can start graduating to lower interest rates. Lenders see someone in control of their debt, able to make all the scheduled payments and pay the loan off on time.  Combine that with an improved credit score and you could be on your way to fixing bad credit and building a better financial future. 

The power of on-time payments

Bad credit is not something you have to live with forever. Using a bad credit loan to restore your credit works when you make every payment on time and pay the loan off.

Establishing a history of on-time payments can help you graduate to lower interest rates. Over time, you could find yourself enjoying a much more stable and secure financial future.

To explore all your options for establishing great credit, contact your local easyfinancial branch.


Disclaimer: This content is intended for informational purposes only and does not constitute financial advice on any subject matter.

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