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Getting a Line of Credit with Bad Credit

A line of credit can help you cover substantial expenses without paying the high interest rates associated with credit cards. Unfortunately, getting a line of credit with bad credit is quite challenging. Keep reading to learn more and find out how Alpine Credits can help.

How to Get Approved for a Line of Credit with Bad Credit in Canada

line of credit with bad credit 01 alpine credits

Traditional financial institutions rarely offer lines of credit to anyone with a credit score below 740. This is because lines of credit are typically unsecured, which means lenders take on considerable risk.

Here are some of your options for getting a line of credit with bad credit despite this general rule.

Getting a Co-Signer

Some financial institutions are willing to look past your low credit score if you have a co-signer with a better record.

The challenge here is twofold. First, not every financial institution allows you to have a co-signer on a personal line of credit. Second, being a co-signer on a loan is a very big commitment. If you ever fall behind on payments, the co-signer will have to pick up the tab or see their credit report suffer as a result. As such, convincing someone to be your co-signer can be quite challenging.

Choosing a Lender That Specializes in Lines of Credit for Bad Credit

Another option you have is to apply for a line of credit from an institution that specializes in serving clients with low credit scores. You can determine whether a lender fits this category by asking questions such as:

  • What is the minimum credit score required to get a loan?
  • What income do I need in order to qualify for a loan?
  • What type of borrowers do you specialize in working with (i.e. prime or sub-prime)?

This isn’t a free lunch, though. To compensate for the risk of offering loans to those with bad credit, these lenders charge exorbitant interest rates and fees. For example, one very popular payday lender that offers lines of credit charges an annual interest rate of nearly 47%. This is an absolutely insane amount of interest to pay when you consider that typical lines of credit charge interest rates well below 10%.

At an interest rate of 47%, even a modest line of credit can cost you thousands of dollars per year.

It’s a similar story with peer-to-peer lenders. Because the borrowers using these peer-to-peer networks are typically in the highest risk category and have high default rates, interest rates are usually quite high as well.

Using Your Credit Card

Credit cards resemble lines of credit in many ways. They are revolving credit, which allows you to only pay interest on the amount of money you use.

One of the primary factors that push people towards lines of credit over credit cards is interest. In Canada, the average credit card interest rate is roughly 19%, compared to lines of credit that charge well below 10%.

However, if you have bad credit and are unable to qualify for such a low-interest line of credit, using your credit card may not be such a preposterous proposition.

There’s a very important caveat, though. While credit cards can be a relatively cheap means of borrowing compared to lines of credit offered by sub-prime lenders, there’s no need to go that route if you have other options.

Waiting Until Your Credit Score Improves

Credit scores are not static. They constantly change based on factors such as how you use your credit and the age of your accounts. As such, you can definitely consider waiting to apply for a line of credit until your credit score has improved.

In the meantime, you’ll want to take steps such as:

  • Making payments on time: Contact your creditors if necessary to work out arrangements that will prevent you from missing payments.
  • Be selective in which loans you apply for: You should only apply for loans that you genuinely want and believe you can get. Applying for too much debt within a short period of time can often resemble desperation and reduce your likelihood of approval.
  • Lower your debt-to-income ratio: Your debt-to-income ratio is the percentage of your monthly income that goes towards debt repayments. Lenders like to see ratios below 36%. You can achieve this by either reducing your debt or increasing your income.

Of course, none of this is very helpful if you need a line of credit to cover urgent expenses.

Own Your Home? Consider a Home Equity Loan Instead

If you own your home, there’s no reason to worry about getting a line of credit with bad credit in Canada. Why? Well, you’ve got a sizeable asset you can borrow against at pretty much any time – your home!

At Alpine Credits, we believe that no homeowner should have a hard time securing financing at a time when Canadian property valuations continue to hit record highs. As such, we make it easy to unlock home equity at reasonable interest rates.

We don’t focus on your credit score or even your income when evaluating your application. Our primary concern is the amount of equity you have in your home, which we calculate using the following very simple formula.

home equity loans formula alpine credits

Next, let’s look at some benefits of choosing a home equity loan over a line of credit.

More Manageable

Lines of credit can be difficult to manage, especially for those whose poor credit scores are the result of bad spending habits. The issue lies in this type of debt’s revolving nature. There’s nothing stopping you from making a monthly payment and then immediately spending that amount again, effectively never getting out of debt.

A home equity loan, on the other hand, is an installment loan. Every payment you make brings you one step closer to getting out of debt.

Better Interest Rates

While lines of credit from sub-prime lenders come with interest rates as high as 47%, we charge much more reasonable rates. That’s because our loans are secured, whereas sub-prime lenders typically offer unsecured loans and have to charge higher interest rates to compensate for the increased risk.

Visit this page to learn more about how our interest rates compare to those of other lenders.

Easy Approval Process

Applying for a line of credit with bad credit in Canada can be a very nerve-racking process. Canadian lenders have incredibly high standards, often requiring credit checks and proof of income.

The process also typically takes a fairly long time, with some lenders reviewing your application for days or even weeks.

This isn’t the case with home equity loans from Alpine Credits. We strive to evaluate all loan applications and deliver a decision within 24 hours. Plus, we don’t pry into your income or credit history. Our main concern, as we mentioned earlier, is the amount of equity you have in your home. Whether it’s $10,000 or $300,000, we can help you out!


You can use a home equity loan to cover a very wide range of expenses, including:

After all, it’s your equity! We trust you to make confident decisions about what to do with it.

Contact Alpine Credits to Apply for a Home Equity Loan Today

If you own your home and are interested in applying for a home equity loan from Alpine Credits, visit this page. We’ll be happy to walk you through the application process and help you get funded today!

At Alpine Credits, Homeowners Get Approved.

Apply now or call (1-800-587-2161) to find out how you can subscribe for RESP through your home equity.

Frequently Asked Questions

Getting a traditional loan with a credit score of 500 is incredibly difficult. Alternative lenders will also charge you very high interest rates for such a loan, making it a poor financial decision. Your best bet would be to apply for a secured loan, such as a home equity loan.

It’s relatively easy to get approved for a home equity loan. As long as you have equity in your home, you’ll qualify!

You have two primary options. First, you can search for a loan from a company that specializes in servicing consumers with low credit scores. Second, you can apply for a type of loan that does not determine creditworthiness based on your score (i.e. a home equity loan).

You’ll generally want a credit score of 750 or higher to qualify for the best loans at the best interest rates. You can certainly get loans with lower credit scores, though. It’ll just cost you in the form of higher interest rates.

To avoid this, choose a type of loan in which your credit score is not a major consideration. With a home equity loan, for example, lenders are primarily concerned with the amount of equity you have in your home.