Having no credit does not necessarily translate to bad credit, or that it’s impossible to get a loan.
Jeff Nilson
A lack of credit history can make it difficult to get credit or loans in Canada. Many lenders want to see that you’ve previously borrowed money and can pay it back on time. However, having no credit does not necessarily translate to bad credit in Canada, or that it’s impossible to get a loan.
Canada’s major credit bureaus, Equifax Canada and TransUnion Canada, only issue credit reports on the basis of an individual’s two-year activity. If you have an inactive credit report, or no credit history at all, here are three things that will help you get a loan approval:
Getting a Car Loan with No Credit History in Canada
1. Catalogue Your Documents
Your financial accountability is determined by your credit history and lenders always want to look at it. However, if you don’t have any history, they can consider other factors to decide your risk eligibility. Information can be extracted from your banking accounts to see your money management, and this can be a crucial component to getting a loan. Documents like your employment history, past residencies, and utility receipts can also come in handy for lenders to see how well you are at maintaining jobs, living situations and bill payments, respectively.
2. Get a Co-Signer
Although finding a co-signer could be a herculean task for some people, if you can find a relative or friend to sign, your chances of getting approved will increase. Finding a person with good credit to be your co-signer will make lenders feel comfortable about giving you a loan. However, your loan will reflect on your co-signer’s credit report, and they will be responsible for any debt that you can’t pay, so it’s important that both parties recognize the risks involved with taking this path.
3. Start Building Your Credit History
You can start building your credit history at any given point in order to be able to prove that you can manage your money to lenders. Sign up for a credit card to establish a good score by making your payments on time, like a secured credit card, or work to build your credit through a guaranteed approval auto loan. Your consistent and responsible use of credit will show creditors that you’re reliable enough to handle a loan.
Lenders want to see that a person is financially accountable before they give out a loan. However, having no credit history doesn’t automatically mean that you won’t qualify. Show other documents to lenders that demonstrate how you manage your money, go in with a co-signer, or develop your credit history with a guaranteed credit card in Canada.
Speaking of credit, a car loan can also help you achieve good credit in less time. Call Canada Auto Experts because regardless of your credit score — they can help you get driving through their quick and secure online car loan application. You can also contact their auto loan specialists at 1-855-550-5565 today!