Job loss, car breakdown, flooded basement… Financial advisors always say that everyone should have an emergency fund worth at least three months’ net pay, but most of us don’t. Unforeseen events can be expensive, and we don’t always have the cash to deal with them.
People who don’t have enough savings to face emergencies and difficult situations often need private loans. Unfortunately for some, banks rely on credit reports to decide if someone is a “good” or a “bad” candidate. Luckily, there are providers of loans for bad credit to help in times of need.
Why Is Good Credit So Important?
A good credit rating brings many benefits. It can get you a lower rate on your loans, including on your mortgage or line of credit, which can save you thousands of dollars over the entire term of your loan. It also allows you to borrow large sums.
When choosing a tenant, most landlords inquire about the applicants’ credit rating. They will usually choose someone with a good credit score, making your request as a future tenant likely to be better received. But landlords aren’t the only ones who use credit scores when reviewing applications. Some employers do the same to gauge how well you are taking responsibility.
Many providers of internet, telephone and cable subscription services also check your credit before writing you a contract. A low credit rating may cause them to demand a security deposit or even deny your subscription request.
A good credit history entitles you to better interest rates for the purchase or rental of a car, which helps reduce the amount of your payments. It can also get you lower insurance premiums. Whether it’s auto, rental or home insurance, your insurance quote may depend on your credit rating. In the long run, you can save hundreds of dollars on your premiums just by maintaining a good credit history.
Finally, you will have access to better conditions on your credit card. Many banks offer higher credit limits and lower interest rates to applicants with good credit.
How Do Loans for Bad Credit Work?
Lending companies like Credit Matik offer loans without credit check to people who meet very basic criteria. Their conditions can be as simple as:
- Being 18 years of age or older
- Living in Quebec
- Having been employed and/or received an eligible income for at least three months prior to applying
- Agreeing to get paid by direct deposit in a Canadian banking institution
- Not being in the process of bankruptcy
- Receiving an income of at least $1200 gross per month.
To apply, simply go to the website of the agency of your choice and answer a short online questionnaire. Once you have submitted your answers, a secure and automated technology called Instant Bank Verification is used to make sure that they are accurate. It is important to note that IBV does not have access to your personal information and banking data, which makes the process even more discreet and confidential.
Lending companies use IBV because it’s the best way to grant you access to emergency funds as soon as possible. With this technology, it takes a few hours at most before the money is deposited directly into your account. In fact, it can even be instant.
On a less positive aspect, loans for bad credit have a higher than average interest rate, in addition to being used for rather low sums, that is to say rarely more than $2,000. As the loan is easy to renew, there is also a danger of over-indebtedness.
However, it can be quite a relief to be accepted on realistic criteria, regardless of your current financial situation and your credit history, all without any credit investigation!