What’s the Minimum Credit Score Needed for a Personal Loan?October 06, 2020
Credit scores can be somewhat mysterious. We hear so much about their importance, how they affect our ability to navigate the financial world, and yet how many among us can actually say we know what our credit score is?
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You could say it’s personal information hiding in plain sight. Our credit scores are readily available to us, but the fact is some of us don’t want to know because we’ve had financial struggles that have affected these scores. Maybe ignorance is bliss.
But you don’t need to hide from your credit score. In fact, having a lower credit score shouldn’t hinder you from getting approved for a loan. Yes, banks and financial lenders will look at your credit score and use that metric to decide whether you are loan worthy. But don’t let that deter you. The rise of financial technology means that online lenders are starting to emerge with different approval criteria.
The good news is there is no minimum credit score required for a personal loan, and fortunately, there are lenders who work with exactly these types of situations. The other good news is a personal loan can help you rebuild a damaged credit score. It’s a win-win, and we’ll show you how.
What’s a credit score?
A credit score is simply a number that indicates your creditworthiness. The higher your credit score, the more easily you can get a personal loan or sign up for things like property rentals or utility accounts (e.g. gas or electricity for your home).
Your credit score is created by two main Credit Reporting Agencies (CRA) in Canada: Equifax and TransUnion. Credit scores range from 300 to 900, and your credit score will land somewhere between these numbers, determined by info on your credit file, which can include details like your credit history, payment history, outstanding loans, credit card balance, and other factors.
Check your credit score for free!
If you’re wondering “what’s my credit score?”, getting this information is surprisingly fast, free, and easy. All you have to do is visit Borrowell to download it in minutes!
Can I get a personal loan with a low credit score?
It’s not uncommon to think a low credit score means you will automatically be shown the door when applying for a personal loan. The big banks in Canada are experts at saying ‘no’ to those with a challenging credit situation. Fortunately, thanks to the internet and the emergence of trusted online lenders, banks aren’t the only game in town.
Lenders like Spring Financial specialize in applicants with a sub-600 credit score. Repayment schedules are adapted to each applicant’s situation to ensure you are not struggling to make payments. And thanks to the open-ended nature of Spring loans, you can pay the loan back whenever you like!
While not essential, getting a trusted family member to co-sign your loan application will help you significantly when applying to most lenders. It lowers the level of risk for the lender, but it could lead to an ugly situation with your co-signor if you struggle to make payments. Your co-signer is on the hook if you slip up. Let’s just say it’s a scenario worth avoiding if you can.
Use a personal loan to improve your credit score
If your credit score is in the “poor” range, don’t hang your head and feel like you’ve been branded for life. Credit scores fluctuate depending on your financial behaviour and can go up the same way they went down.
A personal loan will help you lift your credit score, whether you’re just starting out or you’re trying to recover from a tough financial situation. By making regular repayments on time and in full, your credit status will improve due to demonstrating your reliability. This positive activity of making payments consistently gets reported and is recorded on your credit file. Consequently, it will boost your credit score.
Paying back a personal loan is a road to credit improvement because payment history makes up 35% of your credit score. That’s a sizeable wedge of the pie, so remember to stay within your budget when applying for loan so as not to over-extend yourself.
Get approved today with any credit score
Even if your credit score is below average, Spring can help you get the cash you need, and there is no minimum credit score required.
No matter where you live in Canada, Spring Financial makes the loan approval process quick, easy, and stress-free:
- All credit scores welcome: Get approved even if you’re new to credit.
- Borrow up to $15,000: Loans range from $500 to $15,000 so you can cover everything from back to school expenses to car repairs.
- Convenient application process: Apply online in just minutes or speak to a live representative by phone or text message.
- Speedy approvals and transfers: Watch funds hit your bank account within 24 hours of applying.
- Customizable repayment schedules: Pay your loan back as early as you want, or take up to 60 months; the choice is yours.
- Full transparency: Say goodbye to application fees, maintenance charges, and other hidden costs.
- Safe & secure: Your data is protected thanks to state-of-the-art security technology.
- Trusted online lender: Check out over 1,500 reviews on Trustpilot.