So you encountered some bumps in the road of life and now you have the financial bruises to prove it. If your credit is less than spotless you may be feeling the effects of bad credit. As life moves forward you may find it difficult to purchase items you need such as a car or a home. Although it may be more difficult and you will most likely face higher interest rates there are still loans available to those who have bad credit. If you are in need of a loan but your credit rating is low here are some things you need to consider.
Determine Your Loan
The most important thing to consider is what kind of loan will you need? Are you trying to consolidate bills, secure a loan for a car, or just pay for an unexpected expense? The type of loan needed will influence the type of company you are going to seek out. Some lenders who specialize in bad credit lending will only do secured loans or may only lend up to a certain dollar amount. You will also need to consider the amount of the payment you will need to make and any finance charges that will be applied. Finance charges will generally be higher on loans when the borrower has a low credit rating. Make sure you have a clear idea of all the costs involved before you sign for the loan. These will all be things to consider when preparing to apply for the loan.
Bad Credit Scams
Next be aware of the bad credit loan scam. There are unfortunately companies out there that will attempt to take advantage of consumers who are struggling to get a loan due to bad credit. These companies rely on consumers who are in desperate need of a loan and don’t take time to do their homework. Don’t let this be you, or you could find yourself with no loan and less cash in your pocket. These scams usually occur on the internet and they will promise a “guaranteed” loan before you even apply. These unscrupulous companies will then ask for a retainer or security deposit up front that is just a fraction of the loan to help guarantee repayment. In truth the loan will never be fulfilled and the consumer will lose their deposit. Be aware that it is illegal in Canada to ask for money upfront in order to obtain a loan.
How To Spot a Bad Credit Scam
If you find a loan company on line or in person that you would like to do business with do some research first. Check online for complaints against the company. This can be as easy as doing a search engine search of the companies name and the word complaints or scam. If the company lists a phone number and they always should, call the number just to make sure it is a working number and that the phone is answered by the company you are seeking to do business with. Remember don’t give out any personal information or banking information until you feel confident that you are doing business with a reputable company. If you feel that you may have already fallen victim to a loan scam or you think you have encountered a scam company you should report this to the Competition Bureau at 1-800-348-5358 and it is probably a good idea to report it to Project phone busters at 1-888-495-8901. By doing a little research up front you can save a lot of money and stress later. For help in finding a reputable lender check www.yourloan.ca or www.consumerbadcreditguide.com/ca/loanscanada.html
Once you have found a company that is reputable and you feel comfortable working with check and see what their specific loan criteria are.
Many companies will require you have steady employment and are not a seasonal worker or accepting social aid. Most loan companies will want to see proof of this employment in the form of one or more pay records. You may also need an active checking or savings account, and some loan programs will not accept applicants if they have filed for bankruptcy in the last 1 or 2 years or sometimes at all. Before you apply make sure that you meet the minimum qualifications for approval. Although this does not guarantee an approval it does make it more likely.
Finding a lender when you have bad credit is not impossible but it will most likely take a little more leg work and cost a little more in charges then if your credit was higher. The best thing is to treat all new loans as a great opportunity to improve your credit rating. With each new loan that is handled responsibly and paid appropriately your credit rating will improve. You can check your credit for free each year by going to www.annualcreditreport.com this well help you to track any negative information on your credit and to watch it improve as you continue to build up your credit through new credit history.