Once in a while, people need extra money to pay overdue bills or cover an emergency. Personal loans have always come in handy to help in hard situations. But getting a personal loan in Canada is not a walk in the park.
These loans have requirements that you must meet to get approved. So, if you’re applying for a personal loan in Canada, here are all the things you need to do increase your chances of qualifying.
Maintain a Good Credit Score
You don’t need a reminder to know that your credit score needs to be good enough to get a personal loan. But sometimes, your credit report can flop without you realizing. Mistakes and errors are common, and if you don’t have them checked on time, you might end up in trouble.
Your credit score is a big determining factor when it comes to your loan eligibility. If you have a low score, you should start working on improving the score before applying for a personal loan.
Pay Your Debts on Time
Paying your debt is the right thing to do before applying for a loan. Paying your debts not only ensure you’re debt-free but also raises your credit rating. With a good debt payment history, lenders can have confidence in your ability to pay your dues.
Besides paying for loans, you should also be on time when it comes to your bill payments. Not paying your bills on time can also affect your credit rating, and you don’t want that. Talk to your financial advisor to help you come up with a reliable budget for this.
Use Your Assets as Collateral
One way to qualify faster for a personal loan is to use your personal assets as collateral. You can use your house or car to take a loan. Having your asset as security can make you qualify for a higher loan amount with low-interest rates.
When you use your car or house as security for a personal loan, make sure you pay the loan on time. Your lender has the right to claim your car or house if you default.
Apply Based on Your Qualification
Sometimes people fail to get a personal loan in Canada because they apply for too much. Lenders will check your income, credit score, and debt-to-income ratio when processing your loan. If you’re not sure about your stance, it will not hurt to ask your lender for the requirements before you apply.
Confirming this before you make an application will save you time. You will also save yourself from hard credit inquiries and possible rejection.
Find a Cosigner
A cosigner is someone with a stronger credit history than yours. The person can voluntarily agree to guarantee that you will honor the debt. For instance, a parent can be a cosigner for a child’s first car.
You can easily get approved for a bad credit loan if the lender agrees that the cosigner is reliable. The cosigner will be equally held responsible for ensuring the payment comes on time. Any late payment will affect both your credit score.