Bad Credit, Second Chance Credit
What is bad credit?
If you had to declare bankruptcy, if you did not repay your debts or if you have used insufficient funds cheques, your credit report has inevitably been affected, and it will be difficult for you to obtain an auto loan from traditional financial institutions. Before you take any decision, why don't you contact us so that we can discuss together the best second chance credit rates for your situation?
What is a credit reporting agency, or credit bureau?
Credit bureaus are independent companies that keep up-to-date reports on how individuals or companies in Canada manage their credit. They are governed by provincial and federal laws which stipulate how these companies can store and update this information.
Credit bureaus' customers are the financial institutions and other companies that give you credit. Before you are granted with credit by financial institutions, they generally want to know about your credit history. Instead of seeing with every company that has granted you a loan in the past, they ask a Canadian credit bureau for a credit report.
What is a credit history and how can I know about mine?
Your credit history establishes your willingness to repay your debts. It is not determined by your bank, the credit card company or by a credit bureau. It is determined by you.
If you have made a request for credit in the past in Canada, car financing or any other type, you presumably have a credit record at the two major Canadian credit bureaus, Equifax and Trans Union Canada.
Your credit history includes information such as your birth date, address and employment status to identify you, as well as a complete report on the credit you currently use or that you have used in the past 6 years, or beyond that if you have ever declared bankruptcy. This report is kept up-to-date by all the companies that will give you credit, such as banks, credit card companies, car rental companies and retailers, etc.
The following questions and answers will provide you with further information on your credit history and on what it means for you, the borrower.
What is a credit rating?
Your credit rating is an evaluation of your capacity to manage the financial burden that is credit at a given moment. It is important to know that your credit rating may vary. It is directly affected by the fluctuations of your financial situation.
Most financial institutions offer comparable products and collect the same kind of data prior to a credit approval. Yet, credit approval policies vary according to the products and the lenders.
Your global credit rating is a major factor in determining the type of credit and the amount you may be granted at any given moment. Hence the importance of establishing and maintaining the best rating possible.
A good credit rating allows you to request and obtain credit over the phone or the internet. Some requests that are more complicated may require a little bit more time.
How long does the information remain in my credit history?
According to the provincial legislation, negative elements in your credit history are deleted after six or seven years. Generally, in the absence of negative information, fully repaid loans or credit remain in your report forever.
Your capacity to repay your debt
You have to give proof of your capacity to repay your debt within a given length of time. This will be determined by your income and your degree of indebtedness.
Using mathematical equations, we will help you to determine your debt service ratio. This ratio is the percentage of your monthly income you are able to use to repay your debt. If the results of these equations indicate that additional responsibilities regarding credit can affect your willingness to honour any arrangement or your capacity to manage your currents expenses, your credit request may be refused.
When you give some of your belongings as a security in exchange for credit, the value of these belongings must be determined properly. As the value of some goods can fluctuate or completely devaluate over time, some forms of warranties are considered to be greater in value than others.
How can I make sure my credit history contains no mistakes?
The information in your credit history is provided by the companies which you have borrowed from, and it should always be accurate and up-to-date. To verify your information and make sure you have not been a victim of identity theft, you may want to validate your credit history regularly.
In Canada, credit bureaus can send you a copy of your credit report by mail, for free. For more information, do not hesitate to contact us by phone at 1 866 810-4994 or by e-mail at the following address: service@creditautodirect.com
