Canadian Home Equity Loan Bad Credit
Home equity loans can be used for a variety of reasons even bad credit. When you have bad credit a home equity loan can allow you to payout or negotiate your debts which should improve your credit and improve your chances of qualifying back at a bank in as little as 12 months. Second mortgages are mostly used when consolidating your debts into a bad credit mortgage loan.
How to Negotiate debt into a home equity loan.
We can show you how to negotiate debts with an R5 to R9 down and in some cases, paying 50% to 35% on the dollar. We also work with secondary debt management companies that can help assist you. Many times, the home equity loan can pay for itself with the money you save in negotiating these debts.
What is Bad Credit
Credit scores in Canada range from 300 to 900. The higher the credit score the better your chances of getting approved. A bad credit score is 600 or below and if you are in this range your application usually will have to be serviced by a private mortgage lender.
What Causes Bad Credit?
Bad credit can happen from a combination of issues:
Payment History, late payments and missed payments can negatively affect your credit score.
Delinquencies continues late or missed payments
Balance & limit: Keeping balances over 50% of the limit and constantly running up the limit of your credit card can have a negative impact on credit score.
To Many enquirers: Credit seeking has a negative impacted on your credit score. Applying for car loans or multiply credit card application or other applications for credit can impacted your credit.
Account History: Credit is a history of you using credit. If you have very new credit this can be a false credit score. As well if you close old credit cards you are wiping out history that can be vital to showing your history.
What is a good credit score?
Good Credit scores start at a rating of 650. Depending on your income and debt servicing levels you should be able to obtain many options of financing.
What do the Credit Rating symbols mean?
This information is provided on office of consumer affairs of Canada website
R0: Too new to rate; approved but not used.
R1: Pays (or paid) within 30 days of payment due date or not over one payment past due.
R2: Pays (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due.
R3: Pays (or paid) in more than 60 days from payment due date, but not more than 90 days, or not more than three payments past due.
R4: Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due.
R5: Account is at least 120 days overdue, but is not yet rated “9.”
R6: This rating does not exist.
R7: Making regular payments through a special arrangement to settle your debts.
R8: Repossession (voluntary or involuntary return of merchandise).
R9: Bad debt; placed for collection; moved without giving a new address or bankruptcy.
NOTE : Other rating indicators that might be found on a report are “I” for installment credit or “O” for open credit line.
Source : Equifax Canada