Why can it be difficult to get a loan? What are installments? What is revolving credit and why is it important? These are key terms to know if you’re looking to get approved for financing. We’re here to uncover the common challenges that you may face when getting a loan and some tips to increase your chances of getting approved!
Reasons People Struggle to Get Approved
1. First Time Car Buyers
Lenders look at two types of credit on your report: revolving and installment credit. But what are they?
Revolving credit works just like a credit card. Once you pay off your monthly balance, the credit is available to spend again.
Installment credit doesn’t allow you to spend it again after you pay it off and is commonly used for auto loans or student loans.
Lenders prefer if applicants have a mix of both revolving and installment credit, which can be challenging for a first-time car buyer to have. As well, you may not get approved for a loan if you have insufficient income.
2. No Credit
For newcomers to Canada or young adults without established credit, building your credit can be daunting. We recommend finding lenders that are experienced in helping people with limited or no credit history, like Birchwood Credit! A helpful tip is to have well-organized documents such as your employment records and proof of residence to show you’re a responsible candidate.
Read More: How to Get a Loan With No Credit
3. Bad Credit
Did you know that around 20 percent of Canadians have imperfect credit? This means their credit score falls between 680 and 749. If your credit history includes a consumer proposal or bankruptcy, your score might dip below 520. However, your credit score isn’t the only thing needed to get approved for a loan! If you have credit challenges, you can get pre-approved for financing with Birchwood here!
Our experts at Birchwood are here to lend you a hand in securing that loan, even if you’re starting from scratch with no credit! Keep in mind the reasons why you may not be approved for a loan, and don’t be afraid to reach out to us with any questions!