28 February 2022 |
First, while credit card companies and credit unions generally show more interest in people with good credit scores, they also know that bad credit isn’t always due to irresponsible or reckless spending. Moreover, some behaviours considered risky by the credit bureaus may only be temporary. For example, you may have had credit problems years ago, but now your credit behaviour is responsible. These types of changes are reflected in your credit report and can help you get new credit after being rejected before.
If you’ve been turned down for a loan because your credit history doesn’t look so good, don’t panic just yet! There are still plenty of options available for people with credit problems. Obtaining credit or a loan with a poor credit rating is possible.
Here are some solutions for you.
1) Some credit cards do not require score verification
Many lenders, credit card companies and credit unions may approve people with poor credit scores without verification. These loans usually carry a much higher interest rate than those given to people with good credit scores, but they can be very useful in an emergency or when you need extra money before your next payday.
You can also get credit cards that help improve your credit rating.
If your credit score is low, you may qualify for a credit card with no security deposit and a very low credit limit — $100 to $300 in most cases. The credit limit you get is usually proportional to your income and credit history, so it can vary considerably. This type of card also reports payments on time, which will help you build your credit rating over time.
The NBC website gives some tips for rebuilding your credit file.
2) You can get help from specialists in score recovery
Credit repair agencies have special solutions for customers with poor credit scores. In many cases, these solutions work as long as customers also do their part, such as making all payments on time. On the other hand, such agencies often charge high fees. So be cautious and do your research on the said agency before committing to anything.
3) An advisor can help you if you already have several credit problems on your credit report
If customers can’t improve their credit score by paying off their debts themselves, there are also credit counsellors who can help. However, this credit service is generally preferable for people who need credit counselling or credit education but do not wish to enroll in a credit repair program. In most cases of credit score improvement, these counsellors can help customers overcome difficult credit difficulties and gradually improve their credit scores over time.
4) You can obtain loans with no credit rating
Even if you don’t know where to start when looking for a loan, keep in mind that there are lenders who will consider your application even if you have a poor credit score and no collateral. These types of loans generally carry higher-than-average interest rates and should only be used when you really need the money immediately (for example, car repairs or dental expenses).
5) You can improve your credit with a secured credit card, but only if you use it responsibly
When people want to rebuild their credit history, they usually have to apply for a secured credit card and wait for their experience to appear on their credit report. However, some customers also benefit from building new credit using secured credit cards. Keep in mind, however, that an activated credit line is required for this to work and that credit bureaus can also give credit scores based on credit utilization data from card issuers as well as payment history reported directly by creditors.
On its website, the Government of Canada explains the basic principles of credit reports and credit scores.
6) Get a credit limit increase from your creditor if you can’t access any other type of loan
When people can’t get credit elsewhere, and their credit score isn’t great either, they usually try to apply for a credit limit increase first. While this won’t solve all financial problems overnight, increasing the credit limit will help improve credit scores over time and eventually enable customers to obtain new credit with better interest rates.
7) To increase a person’s chances of being approved for new credit, use credit repair agencies selectively
Raising credit scores can be done either by paying off credit accounts (without using credit cards or loan products for a long period of time) or by using credit repair agencies to help customers improve credit account information. Although there are many online credit repair companies, it’s best not to use them until you’ve checked out their reviews first. It can also be helpful to research how credit repair works and, if possible, find out what percentage of the company’s customers are satisfied with the results before signing up.
8) The peer-to-peer solution
If credit scores aren’t good, it’s possible to try obtaining credit from peer-to-peer lending companies. Although these types of loans generally carry higher interest rates than credit cards and traditional loan products, they are still better than loans that require extensive checks on your behaviour. Note that credit ratings are not the only creditworthiness factor for this type of business.
9) Mortgage adjustment
When people have poor credit scores and have tried other credit repair strategies, they may consider credit enhancement services specifically designed to help them obtain mortgages. Since mortgage credit repair involves loan applications, it’s always best to use credit agencies that specialize in this area of creditworthiness. Reputable credit checking companies will also guide customers through the application process, helping them choose between different lenders based on credit reports, interest rates and other important factors.
In conclusion, credit improvement can be a long and difficult process, especially if you already have credit problems on your reports. However, with time and effort, it is possible to improve the credit scores of those who need the help of credit repair agencies or credit counsellors. When choosing credit repair companies, remember that not all are equally effective or trustworthy. Before you sign up, it’s also wise to do your research by checking company reviews online.