How to Get a Loan With Bad Credit

If you have a bad credit history you may find it difficult to get approved for a personal loan in Ontario. Financial mistakes such as missed bill payments, unpaid debts and multiple credit card applications can lower your credit score.

If a series of financial institutions deny your loan application you should find out the reason for your credit problems. If you have a good credit history but have a low credit score, you need to find out if fraud or identity theft has taken place.

Fix Your Credit

Request a copy of your credit report. Order a free copy of your credit report from one of the credit agencies, Equifax or TransUnion. Visit the credit agency website and print out the credit report application form.

Fill out the form and send it by mail to one of the two credit agencies. You must include two pieces of identification with your application. You should receive a copy of your credit report within three weeks. You also have the choice of paying a fee to access your credit report instantly online at the credit agencies' websites.

Review your credit report carefully. When you apply for personal loan lenders evaluate your credit history and score. Check for any incorrect or outdated information listed on your report. If you find errors on your report, contact the credit bureau to request a change.

You can point out a credit report mistake to potential lenders by adding a short statement to your credit file. Paying off outstanding debts, limiting the use of retail credit cards and paying your monthly bills on time may improve your credit score.

Applying For a Loan

Apply for a personal loan at a financial institution. Research bank loan policies to see which banks offer bad credit loans. If you plan to apply for a personal loan at a credit union you must first become a member. To become a member of a credit union you must purchase at least one credit union share, which costs between $25 and $150 (2010).

Establishing Good Credit With The Bank

If you cannot find a financial institution that will approve you for a loan then consider applying for a secured credit card or bank loan to prove your trustworthiness. Find a bank that offers secured loans and schedule an appointment. You will need to fill out a secured loan application form, open up a bank account and make a security deposit.

Make on-time monthly payments on your secured credit card or loan to establish a good credit history with the bank and raise your credit score. Once the bank returns your security deposit you may qualify for an unsecured personal loan.

Find a Co-signer

You can get a personal loan in Ontario with bad credit if you find someone with good credit to co-sign for you. A co-signer signs a contract with the lender agreeing to pay back your personal loan if you fail to pay. Ask your family members, friends and co-workers to co-sign a loan for you.

Get a Direct Loan From Someone You Know

Get a direct personal loan from a family member, friend or business associate. If someone agrees to give you a direct personal loan create a loan agreement contract outlining the interest rate, due date, and repayment arrangement. The agreement becomes legal when both you and the lender sign the contract. The lender may choose to have a third party witness sign the contract as well.

Loan Tips:

• Multiple loan applications can negatively affect your credit so don't apply at financial institutions that are unlikely to approve someone with bad credit.
  
  
  • Beware of high interest loans. Some lenders specialize in bad credit loans but the high interest rate means you will be paying back much more than you borrowed.