3 Misconceptions About People With Bad Credit
At Auto Loan Solutions, we have been helping people with no credit or bad credit find affordable ways to buy a vehicle when they need one since 1959. In that time, we have learned that the one thing all of our clients have in common is that they have nothing in common. There is no “typical” customer who is looking for our help to get a car loan. We see people from all walks of life, and we know there are a lot of reasons why you may need our assistance to qualify for automotive financing. There are a lot of misconceptions out there about people who have had trouble with their credit in the past, and we’d like to take this opportunity to clear up some of that misinformation.
More People Have Credit Troubles Than You’ll Ever Know
Do you remember learning anything about credit and financing when you were in school? You probably don’t, because there isn’t a lot of instruction on how to build and maintain good credit in the educational system. By the time you have the opportunity to learn how credit works, the damage may already be done. It’s so confusing that there is an entire agency with the Government of Canada, the Financial Consumer Agency of Canada, set up to help tackle the problem of financial illiteracy in our country.
Your credit history changes over time and there are a lot of different factors that go into making up one’s credit score. It could be because of multiple credit applications at the same time, because of high balances on multiple credit cards, or because of financial difficulties that may not even be an issue anymore. Anybody can find themselves lacking in the credit department a little bit. In fact, it’s estimated that at any given time, 25% of North Americans are struggling with bad credit. So if you are one of them, know at least that you are in good company.
The truth is that financial difficulties, and in particular trouble with one’s credit rating, can happen to anyone at some point. Know that as long as you do what you can to rebuild your credit, this is not a lifelong sentence to problems with qualifying for financing for your daily household needs. A few positive changes to the way you use credit can turn things around in no time.
It’s Not a Simple Matter of Poor Planning
The assumption that everyone who has financial difficulties or is struggling with bad credit is in that position because of poor planning is a dangerous, damaging one. A rough period with money is something that can happen to absolutely anyone. An unexpected job loss or illness can lead to maxed out credit cards and missed bill payments in the blink of an eye. Miss changing the address on one bill that goes unpaid and your credit score can go for a deep dive, recovery from which can take a long time.
A damaged credit rating is easier to get than you might think. Even a tiny unpaid balance can wreak havoc on your credit score. Consider one Toronto woman’s story. She had an outstanding balance of THREE CENTS on a store credit card that ended up doubling her mortgage interest rate when it hit her credit rating. THREE cents! Think about how easy it is to forget about a tiny balance, and then shudder at the thought of how many times this could have happened to you!
It’s easy to end up with bad credit, and it’s a lot of work to get your credit back in good graces, but it’s worth the effort. Working with reputable lenders who can give you sound advice about rebuilding your credit can help you turn things around in a matter of months instead of a period of years. Once you have improved your credit rating, you can start enjoying the benefits of lowered rates on your existing financial obligations almost immediately. It is in your best interest to do the work to get a better credit rating.
No Credit can be a Problem Too!
Obviously, not having any credit history at all is easier to overcome than having bad credit, but it is still a significant obstacle. The first thing that comes to mind when we hear of someone with no credit history is a very young adult who just hasn’t had the need to obtain credit in their own name yet. This isn’t always the case. There are a lot of other reasons why someone well beyond the “fresh out of school” years would have a limited credit history.
The first is those who are new to Canada that may have had a long and storied credit history in their country of origin. Many new Canadians are surprised to learn when they arrive in Canada that their previous credit history has little or no bearing with lenders once they have arrived here. Married couples are also sometimes surprised to learn that when all of the credit cards and utility accounts have been in one spouse’s name, the other partner can end up in a bad spot financially because of an enormous gap in their credit history. Of course, there is also the first scenario we talked about, a young adult who has not had the opportunity yet to build up credit history.
The lack of credit history can affect people from all walks of life, so think before you judge. We certainly do!
Have you found yourself in a credit bind? We can help you start to repair your credit rating with automotive financing that will get you behind the wheel and on the road to better financial health. Please consider sharing this post with someone who could benefit from dispelling some myths about bad credit. We also have an active online community on our Facebook page where we share ways to improve your credit health. Come join the conversation!