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Thread: How to get a loan with bad credit?

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    Smart Canuck cliff's Avatar
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    So today a colleague and I were talking about how being in bad credit is basically like a vicious cycle that is extremely hard to get out of.

    If you have bad credit no one wants to give you a loan (even a small one) because of fear of not geting paid back. Major banks wont help and even the sketchy ones are reluctant. I mean how do they expect to get OUT of bad credit without aiding them. I mean people make mistakes and bad credit happens. I dont think its fair for people to get punished. Atleast help out by creating a system where a little can be paid off at a time.

    So if you do have bad credit...where can you get a loan??
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    Smart Canuck recessionisnotfun's Avatar
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    That is a tough one. In order to get your credit rating up and running again, you can purchase a pre paid credit card. Your payments go through the credit bureau just like a bank issued cc, you miss a payment it shows, and vice versa. Good luck
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    A secured credit card seems to be the only way to go. Capital One seem to be more lenient with their requirements and may give a lower security deposit requirement.

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    tightwad and proud of it! brunt's Avatar
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    Not meaning to sound unsympathetic here, but I can understand the bank's side to a degree. The best predictor of future behaviour is past behaviour. Bad credit is generally (but not always) an indication of past problems with bills and debt. Additional debt can make a dicey situation considerably worse.

    Sometimes a bad credit report it is just an indication of a lack of information - like when I tried to get a credit card shortly after moving to the US. I was denied, but within six months had built up enough history to get one.

    While real problems with credit history may be due to singular short term difficulties (been there, done that), it may also be indicative of poor spending habits. I think that we all know at least one person who is like this. The problem is, the bank does not know which type of problem pertains to any given person who walks through their door.

    Your statement "bad credit is basically like a vicious cycle that is extremely hard to get out of" made me think for a second. The ultimate problem here is that debt is a vicious cycle that is even harder to get out of. This is their big concern - given that it is hard to get out of debt in the best of times, it is doubly difficult if there are other factors that could make it worse.

    Try a credit union. We had trouble getting a mortgage for our first house due to its unusual characteristics (we took over a partially completed home built by a non-professional builder). Our local credit union gave us a loan without even blinking.

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    Financial Advisor ashedfc's Avatar
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    If the cause of bad (rather impaired) credit is past bad behavior (delayed repayment, or not paying at all, spending over the limit, etc,etc) than one should be changing their behavior, or else the same story gets repeated again. Thats why people who refinance the house (debt consolidation), mostly end up in the same situation after couple of months/years. They don't change their habits........& the price they pay is by ending up again in bad credit.

    There are times when some serious illness, or accident etc can cause such complication as unintended consequence, than you seriously need to get this repaired.

    One way I can think of is (its just a strategy, although every case is different) "Get an RRSP Loan, as it the easiest to get approved, invest the proceeds in a third party fund institution, thereafter, after couple of days, withdraw the RRSP & pay your credit card/or other liability" There are costs, but its the best way to transfer an 18% credit card compounded interest into 3.5% (Prime+0.5%) loan. This is just transferring the liability to a lower interest, so there is time to repair the credit.

    Other way is Credit repair companies - this limits your future borrowing ability.
    Last edited by ashedfc; Thu, Nov 18th, 2010 at 01:03 PM.

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    Hi, You would try to save money exemple 1,000 $ after go to the bank and ask for an RRSP loan. It's more easy because the bank wants to sale a RRSP loan. You can explain to the bank than you made a deposit of your 1,000 $ on a freez account and they will take a monthly payment on that account. After the global payment on this loan - you receive a credit rate like R1 so you can do that for a tree time.... (sorry for my english) Bonne chance !

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    Rebuilding credit is not as impossible as some people out there suggest.

    Be patient, go for small gains quarterly, be careful who you get your cards with...

    It can be done. And the advantages of good credit are important.
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    Getting home loan with bad credit is difficult but not impossible. there era some tips to get a loan with bad credit such as find a good real estate deal, try creative financing, save for a down payment, and improve your credit score to get loan easily.

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    Canadian Genius Insane's Avatar
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    Quote Originally Posted by recessionisnotfun View Post
    That is a tough one. In order to get your credit rating up and running again, you can purchase a pre paid credit card. Your payments go through the credit bureau just like a bank issued cc, you miss a payment it shows, and vice versa. Good luck
    Prepaid credit cards are not reported to the credit bureaus. Secured credit cards are. So if you put down say $1200 for a $1000 credit card, they will report that credit card. After a year or 2 you can ask to have your money you put down as a security back and convert it to a regular credit card. Some people also choose to get a car loan, but the interest rates can be astronomical!

    "Credit repair" companies that say they can fix your credit if you pay are a scam and should be avoid at all costs.

    This link is for after bankruptcy but gives you an idea of what it entails.

    http://www.bankruptcycanada.com/Cred...air-Canada.htm
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    To get your credit rating back on track you need to first pay off the old bad debt. You will not believe how a little at a time will get your bills paid off. Start with your biggest interest debt pay off that. Then the next and the next.
    Now to get a loan after you no longer have any debts but still considered bad credit due to late payments:
    You need to have some sort of assets, I highly suggest you start with a car you usually get book value for the asset price so buy a cheap used car, from an auction or where ever, or other asset ( any asset that you can buy cheaper than what its book value is worth is good, motorbike, snowmobile etc)
    Get a second job to help out with paying off your debts. This also increases your income which could help when it comes to loan time. Even a min wage part time job will help. (what were you doing anyways really)
    And having a long history with your current employer helps too. Unfortunatly the banks like to see stability from their borrowers.
    Also if you can borrow some money from a friend or family member that you tell the banks you will put towards the loan that also helps to secure one. (tell them you have savings at another bank)

    You really dont' want to get a loan from a finance company either, interest is like 29%!!!!!!!!!
    So assets, and some of your own money to put towards the loan can also sometimes help and Yes Credit Unions are pretty good to try too.
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    One of my clients with a credit score of 540 got a $1000 limit cred. card from Capitol One last week
    If you go ahead and get one of these, MAKE SURE you pay promptly. You don't want even one report of a day late payment.
    Also, as others have stated, continue paying down your debts responsibly. It all shows up on your credit bureau.

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    Mmm, Coupons. RegulusLeonis's Avatar
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    I've been there. I had close to $10k in credit card debt (why do they give 18 year olds credit cards with high limits?). It was to the point where I was dodging calls every day. I had to use my vehicle as collateral to take out a debt consolidation loan and I never missed a payment or carried a balance again. It took me a couple years to get excellent credit. I would make appointments with loan officers and explain your situation. They might be willing to try to pull some strings for you. As a previous poster said, try a credit union. Servus gave me my consolidation loan. You will be paying a higher interest rate though!

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    Credit risk can also be determine by some alternate sources for example: Phone and cable bills, car insurance, renters insurance, life insurance, school tuition payments. Mortgage lenders use these evidences to check your history of on time payment and this will help you to get qualify for a mortgage.

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    Junior Canuck EvilTofu's Avatar
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    Like brunt had mentioned, the bank isn't running a charity. They have responsibility to their investors, they can't lend money to people who are unlikely to pay back. It is fair.


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