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Credit scores in Canada typically range from 300 to 900. A good credit score is typically anything 660 or above.
But what if you don’t have any credit history? How do you build it? Many lenders won’t even consider your application because you have no credit history.
To build your credit history when you’re just starting out, you need to take out a few loans for people with no credit. Your habits with those loans will lay the basis for a strong (or a poor) credit score in the future.
Let’s look at a few options.
Secured Credit Card
An excellent way to learn how to use a credit card is to take out a secured credit card. This type of card is backed by your own money. This gives you a chance to build credit and lenders aren’t as skittish because you’re putting up the money.
For example, say you take out a secured credit card with a limit of $500. You put down the $500 to secure it. Now you can use the card and make on-time payments to build a good credit score.
Payday Loans
Payday loans have a quick turnaround. They are typically used when you have an unexpected expense pop up that you need to pay before your next paycheck.
Paydays loans have a short repayment period (about a month) and are often paid in one lump sum once the borrower gets their paycheck.
In a sense, your next paycheck is “collateral”, or at least a bit of assurance for the lender that you’ll have the means to pay back the loan on time.
No Credit Check Loans
Another option is to apply for no credit check loans online. These types of loans fall in between payday loans and regular personal loans. You can pay in installments, but the terms are still pretty short — typically from 3 months to a year.
Apply with a Co-Signer
If you don’t have any credit, you could always borrow someone else’s credit. Ask a friend or family member who has good credit to sign on a loan with you.
They promise to take responsibility for the loan if you don’t meet your obligations. In return, lenders will apply their criteria to your co-signer’s credit, widening your eligibility options considerably. If you choose the right co-signer, that is.
Always make sure to pay your loan back on time. Many a relationship has been ruined over money troubles.
Plenty of Loans for People with No Credit
Did you know there were so many loans for people with no credit? A credit history is important in the modern world.
You probably won’t be able to buy a house or even a car without a good credit history. Even if you can buy it, the terms are often not favorable.
However, by taking out one or more of the types of loans mentioned in this article., you can start building your credit history.
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