Getting a loan is hard without the proper credit to back it up. When you can’t qualify with a typical lender like a bank or a credit institution, you can still get a loan in Alberta with bad credit. These bad credit loans are handy when in a tight spot but today, we are talking about credit and how to build it so these are not the only kinds of loans you depend on. It is important to have good credit with major financial institutions.
The two credit reporting companies in Canada are Equifax and Transunion. The nature of a person’s financial background can be seen by lenders through these reports, which show any activity on the accounts including bank or other lending institution transactions. A three-digit number is calculated from this information to represent how big of a risk a potential borrower will pose before they decide if extending them credit would be possible. The higher the credit score, the lower the risk.
There are a few reasons you have not yet established credit in Canada. You could be new to Canada and starting a new life, just got out of your home or just starting to get out on your own. Credit is a powerful factor in our daily lives. Banks, companies, and even landlords can use your credit score to make decisions about how much money they’re willing to lend you or whether you’ll be granted that apartment lease.
Some people are at risk of falling into debt traps when they have a low credit score. A person’s credit history can include any sort of activity, such as opening an account with a bank or other lending institution and their payments to lenders. Lenders look at these documents before deciding whether someone is trustworthy enough to extend them something like a loan. For your score not to be too high, you must make sure that it never falls below 600 points on the scale; anything lower than this amount will likely result in higher prices if borrowing money from suppliers which could lead one down the path towards financial hardship. Here are four ways you can build credit with zero credit history.
You should open a bank account to build your credit
- It’s important for you to have an excellent credit score and that starts with having some accounts on the books.
- A good way to start building up your credit is by opening a personal or business checking account at a bank. Most banks will offer a starter credit card and/or a line of credit. If you get a car loan or a mortgage through a bank and maintain it, this will look great on your credit.
- A high-interest savings account is something you should take advantage of while you are at it.
- The other important part of a bank account for your credit is your overdraft account. An overdraft is a small loan to help you out when your account balance dips below zero.
Open a department store credit card to get going with your credit
- You don’t need to do your shopping in person these days. You can buy everything online and have it shipped right to your door. There’s no reason not to open a department store credit card account, which includes cards from Hudson’s Bay Co., Sears, and other major retailers like Target or Walmart that offer many of the same brands you’d find at Nordstrom or Bloomingdales without the hassle.
- The interest rates are usually on the higher end (about 18-21 percent) with lower limits but they are much easier to get approved for. I was able to apply within minutes after filling out an application form over email while sitting down for dinner.
Apply for a secured card if you have no credit or bad credit and want to establish your credit history
- Secured cards are the same as regular ones, but they require that you put money down upfront in order to get approval so it’s good practice to be responsible by paying bills on time.
- These cards will report any activity just like any other kind of account would do – which is both a pro and con depending on how well-behaved you are. If handled responsibly though, securing one can help increase eligibility for better deals when using them over time.
A co-signer is a good start to building your credit
- If you can get someone to co-sign for you, this will start your credit. It takes a lot of trust to co-sign for someone, however if you can show your close friends or family consistency in being responsible with your finances there is a good likelihood they will co-sign for you.
- Find a co-signer to help you build up your credit history and avoid defaulting on payments, but make sure they have strong enough credit in the first place if this happens because their reputation will be tarnished as well.
When building your credit, be careful about overspending and paying your credit card on time. If you need money in the meantime, it doesn’t matter if you have bad credit or not, you can look into payday loans in Alberta. All you have to do is show your paystub and fill out an application to qualify. There are no credit checks or credit needed. Another option is to look into a car title loan if you own your car.
Too many credit cards or lines of credit can harm your efforts to build good credit. It’s important that you use each credit card responsibly for at least six months before applying for more and only apply when it makes sense with where you are in life financially. Lenders may see this as risky behavior, so think about how much debt is manageable while still trying to maintain the best possible score over time!
