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How The Foundation Makes It Easy for All Canadians to Build Credit

Written by Jessica Steer
For years now, the financial technology industry has been disrupting traditional finance with innovative solutions such as mobile banking, online lending, digital payments, robo-investing, and cryptocurrency platforms.
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    Fintech adoption is on the rise for a few reasons. 

    First of all, the industry’s products and services offer unprecedented convenience, and the pandemic only accelerated the desire for these contactless transactions and interactions. Lacking the nimble innovation that defines the fintech industry, high street banks have simply not been able to keep up. 

    Secondly, the 2008 financial crisis contributed to a growing distrust in traditional financial services. Most Canadians remember it all too well; foreclosed homes and life savings lost during the Great Recession. The rise of financial technology means that Canadians have more options today, and they are choosing to give their business to challenger banks, online lenders and brokers, and blockchain applications offering better value and simpler user experiences. 

    By providing incredible convenience and greater variety, fintech is reshaping consumer finance for the better. But there is another powerful benefit of financial technology that doesn't get discussed as much: how it drives financial inclusion

    Driving inclusion in Canada

    Today, fintech companies are in a unique position to solve some of Canada’s most pressing issues. Fostering financial inclusion is one of them. The “unbanked” or “underbanked” are those who have limited or no access to mainstream financial services. In Canada, up to 20% of the population is either unbanked or underbanked. 

    But by making financial services (such as low-cost money transfers, online lending, digital wallets, and micro-investments) so accessible and usually available in a few clicks, more unbanked and underbanked Canadians are turning to homegrown apps and digital-first providers like Spring Financial, Borrowell, and Wealthsimple to help them borrow, save, and invest.

    Spring to the rescue

    Spring Financial is emerging as a leader on the fintech scene with its sights set on democratizing access to fairly-priced financial products.

    In 2018, the Financial Planning Standards Council found that one-third of Canadians would struggle to cover a financial emergency. With so many people living paycheque to paycheque, establishing some kind of foundation for financial growth is a real problem in the True North.

    But why? 

    It's a story millions of Canadians know all too well. Without savings to lean on in an emergency, bill payments get missed and credit cards get maxed out. Credit scores plummet and credit profiles fall into subprime territory. When this happens, loan and credit card applications get declined as consumers find it harder and harder to access mainstream financial services. 

    As a result, many Canadians feel locked out of the financial system with no other option but predatory payday lenders, which has, unfortunately, surged amidst the COVID-19 pandemic. A vicious debt cycle ensues as interest payments become a significant monthly expense that only gets worse. 

    It’s a modern-day conundrum. If you have a bad credit score or no credit history, it’s difficult to get approved for a fairly priced loan product. And yet, you need access to loan products to prove you are responsible with debt; it’s the only way to build or rebuild your credit (side note: you cannot build credit with payday loans).

    So many Canadians struggle for that opportunity to prove their creditworthiness. 

    But not anymore. 

    At Spring Financial, our mission is to enable any Canadian to access fair-priced financial products. Since 2014, we have been leveraging technology to make a meaningful impact in the lives of Canadians and bring positive change to the financial industry. 

    Most recently, Spring launched The Foundation, an innovative credit-building program that lets you grow credit and save money in a matter of months. By providing an easier path to good credit, The Foundation is changing the way Canadians look at financial progress. Programs like this weren’t available just a few years ago, but now anyone can take control of their financial future regardless of their credit background. 

    The importance of a good credit score

    Your credit score isn’t just about getting approved for more loans. Its importance cannot be understated. It affects nearly every aspect of your life, from job opportunities and housing rentals to monthly bills and even your relationships. Studies have even shown credit scores to be a predictor for life satisfaction

    What is The Foundation?

    The Foundation is an innovative program that lets anyone establish credit and start saving money immediately. It works like a subscription service where every payment you make is reported to Canada’s leading credit bureaus, TransUnion and Equifax.

    Since payment history makes up a large portion of your credit rating, you’re almost guaranteed to see your score go up in 12 months. Thousands of customers have already turned their credit scores around with The Foundation.

    And there’s a savings component too. Over half of every bi-weekly payment is automatically saved for you, which means you’ll have approximately $750 banked when you’ve finished the program. Plus, after 12 months of payments on The Foundation, you’ll enjoy automatic approval for the Evergreen Loan, a $1,500 upfront cash loan at 18.99%.

    Who is The Foundation for?

    The Foundation is for anyone who wants to build credit and start getting approved for fair-priced loan products.

    You should consider The Foundation if:

    • you have a subprime credit profile (credit score below 670).
    • you’re tired of paying high-interest rates or not getting approved for the loans you need.
    • you’re building credit from scratch because you’re a student or new to Canada.
    • you’ve been through bankruptcy, consumer proposal, or credit counselling.
    • You want to diversify your credit mix.
    • You want an entry-level credit-building product that doesn’t require an upfront deposit.
    • you’re trapped in a cycle of payday loan debt.
    • you find it challenging to save money by yourself.

    How does The Foundation work?

    The Foundation can be broken down into three easy steps: 

    1. Sign up

    It doesn’t matter if you have poor credit, no credit, or have filed for bankruptcy – you qualify for The Foundation as long as you have an active bank account and Canadian government-issued ID. Simply call 1-888-781-8439 to submit an application with a live agent or email us at [email protected].

    2. Start building credit

    Once The Foundation is set up as a tradeline on your credit file, you’ll make small bi-weekly payments over the next 12 months. Since every payment is reported to the credit bureaus, your credit score should start to rise as you make all your payments on time. 

    More than half of every payment is automatically saved for you, resulting in a $750 nest egg at the end of the program. You can also tap into your savings at any time to pay for daily expenses or cover your next bi-weekly payment.

    3. Access the Evergreen Loan

    When you have completed The Foundation, your improved credit rating will open doors to lower interest rates and mainstream credit products like credit cards and mortgages. You will also be able to get approved for Spring Financial’s Evergreen Loan, a $1,500 personal loan at 18.99% interest.

    How much does The Foundation cost?

    Your $55 bi-weekly payment goes towards your personal savings and paying for the program. Over half of each payment is saved for you and held at the Peoples Trust Company on behalf of Spring Financial. The rest—about $27 bi-weekly—covers the cost of the Foundation, which includes monthly reporting to the credit bureaus.

    Why should I choose The Foundation?

    The Foundation offers a simple path to boost your credit, save hundreds of dollars, and prove to lenders you can manage debt responsibly. Other benefits include: 

    • Guaranteed approval: Start building credit regardless of your credit situation.
    • Flexible payments: Increase bi-weekly payments to beef up your savings or lower them if you’re working with a tight budget. Terms can also be extended by six months.
    • No hidden fees: You’ll never have to deal with application fees, setup fees, or maintenance fees. There is a $30 missed payment fee, but you can always contact customer support to make new arrangements that fit your changing schedule.
    • Free cancellation: You can cancel at any time without penalty. The only cost associated with cancellation is the outstanding fees from any missed payments. All savings accrued will be refunded to you.
    • No upfront deposit required: Compared with secured credit cards which usually require a security deposit that covers the maximum limit (for example — a secured credit card with a limit of $2,000 requires an upfront deposit of $2,000), The Foundation works with small bi-weekly payments and does not require a large sum upfront.
    • Boost your credit mix: If you already have a credit card (revolving credit), adding an instalment credit product to your file should help your credit score because credit bureaus like to see how well you manage various credit accounts. 

    Start getting approved

    Improving your credit and saving money can be tough, but it doesn’t have to be with The Foundation. With 100% approval, small payments, automatic savings, and reports sent to TransUnion and Equifax, The Foundation is a brilliantly innovative solution for Canadians that want to enact positive change in their financial future.

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