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How to Get a Loan After Bad Credit

loan after bad creditIt is no secret that many Canadians are in debt, but a recent Globe and Mail article highlighted just how much, stating “A growing segment of Canadian families is highly indebted, leaving them more vulnerable to any economic shift such as a job loss, illness or rising borrowing costs. More than a third, or 35 per cent, of families had a debt-to-income ratio above 2.0 as of 2012, meaning their overall debt level was at least twice that of their annual after-tax income, a new paper by Statistics Canada finds. Back in 1999, that share was 23 per cent.”

For many, these debt loads have resulted in less than perfect credit, thanks to high interest costs, the ease with which one can borrow, and the spiral that tends to begin once more and more debt is amassed. When getting a loan after bad credit seems like a nightmare you can’t wake up from, take a breath, you do have options. It is possible to get a loan after bad credit has made the prospect a murky one – even if you are an undischarged bankrupt!

One of the most important things that you can do once you’ve had some less than stellar credit activity is to begin rebuilding – so what are your options?

Payday loans – we will start here because this often seems like the easiest route to take. STOP!!! Payday loans are one of the worst things that you can do. Their sky high interest and revolving status make these incredibly difficult to pay off. Furthermore, since they don’t report to your credit report, their value as a rebuilding tool is nil.

A small secured card is a good idea, but it doesn’t really establish a history of maintaining payments of substance, especially if you have hopes of buying a home or car in the near future.

Your best bet is a secured credit card with a decent limit (i.e. not $300 or $500) and a personal loan that establishes installment credit. This is ideal because it provides two tradelines on your credit report – a credit card and a loan.

If bad credit has been paid off, and after 1-2 years of re-established credit, typically you are clear to qualify for a mortgage.

Just remember, if you have bad credit and are not out of debt, help is available. It is best to seek out a trusted financial advisor who can give unbiased advice!

Is debt causing you stress but bad credit making it impossible to get a loan? Prudent Financial can help. We recognize that life can sometimes bring unexpected expenses, but when it feels like you have nowhere to turn, just know that you do. Call us today at 1-888-852-7647.

You can check out the full Globe and Mail article here: http://www.theglobeandmail.com/report-on-business/more-canadian-families-are-highly-indebted-statscan/article24162884/.

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