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 dented credit score shouldn’t hinder you from achieving your goal of obtaining a personal 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; not all lenders are alike. 

The good news is there is no minimum credit score required for a personal loan, and fortunately there are lenders who works with exactly these types of situations. The other good news is a personal loan can help you rebuild a damaged credit score. It’s 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. The credit score is 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.

credit score ranges from 300 to 800+

Credit scores range from 300 to 900. The table below provides a general guide on how credit score ranges relate to different levels of credit health.

Credit Health

What It Can Mean

Poor (Less Than 580) →

It’ll be difficult to get a loan from a big bank. Improve your score by making payments on time

Fair (580-669) →

Improve your score by making payments on time

Good (670-739) →

You have a good chance of getting a loan from financial institutions

Very Good (740-799) →

Financial institutions might reach out to you to offer services

Excellent (800+) →

You might be able to negotiate with financial institutions for lower interest rates on loans and credit cards

Check your credit score for free!

So what’s my credit score you might be asking. Getting this information is surprisingly fast, free, and easy. All you have to do is visit a site like Borrowell to download it in minutes! Making this enquiry won’t hurt your credit in any way. 

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 Fresh Start Finance 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 Fresh Start 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. 

Payday loans are risky business

Those with poor credit scores tend to think their only option for securing a personal loan is through a payday lender. It’s simply not the case. Yes, payday lenders are well known for their willingness to lend to anybody, regardless of credit score, but they’re also well known for their punitive interest rates and predatory business practices. 

Payday lender says it all in the name. They lend you money and expect to be repaid on your next payday. That’s especially difficult to do, which is why they thrive on penalty charges and inflationary interest rates. To add insult to injury, taking out a payday loan doesn’t help rebuild your credit score the way a personal instalment loan does. 

Another myth of the payday lender is the convenience factor. They’re everywhere! But isn’t it just as convenient to apply online through an alternative lender like Fresh Start? The truth is applying for a loan has never been easier. All you have to do is fill out some online forms that take two minutes and your application could be processed in as little as one day.

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 are dynamic and malleable. They 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. As the borrower makes payments, this activity is sent to the borrower’s credit file at the CRA, so it helps boost the 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 in the pie, so remember to stay within your budget when applying for loan. You don’t want to over-extend yourself and make your credit situation worse. 

Get approved with any credit score 

Even if your credit score isn't average, Fresh Start can help you get the cash you need. There is no minimum credit score required. We work with clients facing all types of financial circumstances, and you can customize your payment plan to suit your needs. And, if you want to save on monthly interest charges, you can pay the loan back whenever you want!

Apply online for free, it only takes two minutes!