People with Bad Credit in Canada May Have Choices that Are Better than an Expensive Personal Loan
If you live in Canada and you’ve been turned down for a loan by your bank or credit union because you are one of the people whose credit doesn’t meet their requirements and you are now looking for a bad credit personal loan, you may actually have other options that can solve your debt problems, re-establish your credit, and get your finances back on track.
The first question you need to ask yourself right now is "Why?" Why do you really need to get this loan? What's pushing you in this direction? Take a minute to click on your answer below and find out if some better choices may be available to you.
- This is for an emergency. Your car broke down, you have a big dentist bill, your dog is sick, you need to travel to visit a sick relative, or something else along these lines.
- You are trying to rebuild your credit or improve your credit score.
- You would like to have just one loan with one payment. You’re trying to get a more affordable payment by paying off your debt over a longer period of time, or your existing interest rates are too high.
1. Money is Needed for an Emergency Situation
If you have a real emergency and you haven't saved up any money to deal with emergencies, then you may need to continue with your search and see if you are able to find a loan company that is willing to lend you the money. Interest rates for personal loans for people with bad credit are often around 47%. You may be able to do better than this, though, if your credit isn't too bad. Learn more and find out how to not get ripped off.
2. Trying to Rebuild or Improve Your Credit Rating or Score
Someone may have told you to apply for a personal loan to improve your credit score. While a loan may help in the long term, at this point it’s not about saving your credit anymore. Right now it’s about rebuilding your credit. To do this, your best first step would be to contact a non-profit Credit Counsellor in your area.
You can meet with a Credit Counsellor in person or over the phone. They can go over your whole financial picture with you, answer a number of your credit related questions, and carefully help you craft a plan to restore your credit rating. You'll learn which particular steps you should take to help you reach your short-term and long-term financial goals. Appointments with non-profit Credit Counsellors are typically free and are always strictly confidential.
You can actually get a jump start on increasing your credit score by implementing the recommendations in our How to Restore Your Credit Guide.
3. Want a Monthly Payment You Can Afford
Before we go further, there are some more questions you need to honestly ask yourself. Is a loan truly the best thing for your situation? Is it really what you need, and will it actually help? Are you dealing with your situation, or are you just extending the pain? Is it possible that a loan will only be a short term solution to a longer term problem that’s been brewing? Have you considered the possibility that a bad credit loan could increase your cost of living, put you further behind the eight ball with high interest payments you can barely afford, and hurt you?
Don't be too hasty to go for something that has the potential to hurt your finances and possibly cause you more harm than good. You need to know your options. Look for advice from someone who isn't interested in selling you a loan - someone who is well-informed about how to turn around a bad credit situation.
The key thing you need to do is resolve the core issue that's causing financial challenges. Finding the cure is critical. Don't just keep prolonging your pain.
As your first step, you should go and see a non-profit Credit Counsellor near you. They'll go over your whole financial picture with you, help you put together a budget, and help you work out your best options to set your finances back on the right track. With situations like this, we find that one size does not fit all. Each situation is unique and needs to be worked through based on the unique circumstances. That's why it's so helpful to spend some time with an expert to work through your situation and discover what options are available to you.
An Alternative Few Know About for People with Bad Credit to Obtain an Unsecured Personal Loan
While there are many ways to help people with bad credit address and resolve their situation, one good option that many Canadians don’t know about is a Debt Management Program.
If you decide you would like to put your debt onto a Debt Management Program, the credit counselling organization you're working with will communicate with your creditors and make arrangements for your unsecured debts to be placed on the repayment plan (while it's not actually a personal consolidation loan, it essentially achieves the same sort of thing). All of your payments on these debts are brought together into a single affordable monthly payment, and the interest you were paying is either removed or dramatically cut back. If you also have any secured debt, your Credit Counsellor will incorporate any payments for that debt into your program so that you'll be able to afford your payments every month.
The average program lasts 2.5 years (the maximum length is 5 years), and the credit counselling agency can work with you to rebuild your credit once you've finished the program. Some credit counselling organizations even have a credit rebuilding program available in the back end of the repayment program that you can choose to take advantage of if you wish to.
What You Can Look at Doing If You're Having a Struggle with Your Debts in Canada
If you’re having a tough time with your personal debt and really need some help, don’t prolong the suffering with a bad credit loan. Talk with a qualified, Canadian, not for profit credit counselling organization right away and get some help to put your finances back on the right track. Another really nice thing is that non-profit credit counsellors often work with people for free, and their assistance is totally private and non-judgmental. You really don't have anything to lose by speaking to someone like this. Their job is to simply help you. Call one today.
- How to Overcome Financial Problems & Difficulties
- 12 of the Most Effective Ways of Getting Out of Debt
- How to Fix or Re-establish Your Credit
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