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Bad credit loans in Ontario 

Whether you need $10,000 or $50,000 – Alpine Credits is the best alternative for personal loans in Alberta

A mortgage agent with her clients

In Canada, creditworthiness is measured through a point system ranging from 300 to 900. The higher your score is, traditional financial institutions are more likely to recognize you as a reliable borrower. Credit scores apply to all loans, including mortgages and vehicle financing, so building your creditworthiness is important.  

If a borrower’s credit score is below 660, they may find getting loans from traditional lenders challenging. In that case, people might look to bad credit loans for funding. However, bad credit loans aren’t a type of loan; they are often called so to refer to loans that cater to borrowers with low credit scores. As such, these borrowers have the opportunity to secure bad credit loans in Ontario. 

Understanding bad credit loans in Ontario

The average credit score in Ontario is about 690, which can be high enough to get approved for major loans from financial institutions. Overall, Ontario residents have healthy credit, but factors such as being new to Canada and missed credit card payments can determine what type of credit score you have.   

A loan for people with a bad credit score is not actually a distinct concept from other kinds of loans. Bad credit loans have their name because the loan is for people who have credit scores that are less than ideal. 

Secured loans

The defining trait of secured loans is that they require an asset to act as collateral. Houses and vehicles are the most frequent collateral items. Since secured loans are supported by collateral, some lenders may not need to look at your payment history or credit history and might offer lower interest rates than unsecured loans.

Unsecured loans

In contrast to secured loans are unsecured loans. The main difference between the two is that unsecured loans do not need a collateral asset.  

Since they don’t need collateral, unsecured loans will typically have higher interest rates compared to secured loans. Unsecured loans typically rely on your credit score, income and job history and, an assessment of your ability to repay the loan.

Payday loans

One of the quickest ways you can get funding is by applying for a payday loan. Before applying for one, be sure to give the decision a lot of consideration. Payday loans have their name because borrowers are expected to return the money by the next payday but with an exceedingly high interest attached. 

Payday loans are known to have fewer criteria because they don’t typically look into your credit score. While they have faster processing and approval times, you can have the loan for 14 days. The interest rate can reach up to 400% of the initial balance.

Installment loans

Another way to refer to installment loans is as personal or commercial loans. They are like any other loan and can be secured or unsecured. The loan is paid in installments, which is where it gets its name. For most loans, borrowers repay them every month.

Home equity loans

A more unique kind of loan is a home equity loan. Both banks and alternative lenders offer home equity loans, but the bank may have higher standards than alternative lenders. In either case, the value of the home equity loan is based on the equity that you’ve built up in your property

You can calculate the equity in your home by subtracting your outstanding mortgage balance from the appraised value of your home. If you’ve owned your home for several years, you may have built a larger amount of equity. Since the value of your property equity can be high, you may be able to obtain larger amounts of money through a home equity loan.

Being a secured loan, home equity loans do not have as many requirements as unsecured loans. Depending on the lender, only your equity may be factored into the approval instead of your income or credit history. Home equity loans give many Ontario homeowners the opportunity to improve their credit score by applying here.

As part of the approval, your lender will work with you to highlight the most important details of the loan such as the payment frequency, interest rate, and term length.

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Application process for a home equity loan

Making important purchases like buying a house or renovating your home may require more funding than any other ordinary expense. While you could choose from a variety of loans Ontario has, the four most common ones are business, home renovation, consolidation, and home equity loans.

Contact the lender or apply directly on their online forms or website— you can apply immediately here.

Wait for the lender to process your application this may take a few days at alternative lenders, but traditional lenders could take weeks or months. 

Receive the money in your bank account upon approval be sure to use the money for your original intention.

Conclusion: loans for Ontario residents with low credit scores 

For now, credit score (and the underlying payment history) and income history are the main metrics that banks use to determine a person’s creditworthiness. Even so, everyone should have the opportunity to get a loan to help with their financial situation. A home equity loan could be a great option for homeowners in Ontario.  

If you have paid down at least 25% of your mortgage, you could be eligible for a home equity loan from Alpine Credits. Neither your income nor your credit score will be considered when you apply for a home equity loan. To find out more about home equity loans and what they can be applied to, contact a Financial Solutions Specialist at Alpine Credits. They’ll be able to answer all your questions about the loans and can get you started. 

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Frequently asked questions

If you have a bad credit score and no job, you might need to consider lenders that provide secured loans. If you own your home, you may qualify for a home equity loan.

The simplest way to improve your credit score is to pay your outstanding balances in full. Afterwards, continue to monitor how much you spend so that you don’t utilize over 30% of your total credit limit. You’ll slowly see a steady improvement over the next few weeks.

If you have a bad credit score and have a bankruptcy on your record, you might need to consider lenders that provide secured loans. If you own your home, you may qualify for a home equity loan. 

The time to get approved for a loan if you have a low credit score will vary depending on the lender and the type of loan you apply for. Private and alternative lenders have a reputation for being faster than banks, but you can expect the results of your application typically within a few days to a week.