It is nearly impossible for a Canadian citizen to borrow a loan from any financial institution or lender without having a credit history.

Credit history is the report of your transactions, including whether you have paid your dues on time, and that includes loans and credit card accounts.

A credit history reflects the fact that you can pay your dues on time and appear trustworthy to the bank or lender.

● Having a good credit history will make you more trustworthy, and you can get a reduced interest rate.

● If you are new to Canada, you might have a problem borrowing a loan as you will not have a credit history for people to check before issuing a loan.

However, your chances of borrowing a loan don’t decrease, as this digital era has made it convenient for people with no credit history to borrow one.

Here’s how you can borrow a loan without having a credit history:

Loan Options Available for People Without a Credit History

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This revolutionized era has given us convenient ways to borrow a loan apart from credit unions and banks.

● This digital era has made it possible, as you can find multiple lenders that are ready to sanction loans to people without a credit history check.

These lenders use leveraged analytics, such as your income, to calculate whether you can repay the loan without using your credit score as a factor.

● However, it is integral to go through the loan policy terms and fully understand the risks associated with that policy.

● You might land in trouble if you do not scrutinize each detail and understand the loan terms.

Two Types of Loans Available With No Credit History for Canadians 

There are two types of loans that you can borrow in Canada without any credit history:

1. Payday Loans

2. Personal Loans

Payday Loans

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One of the options available for Canadians with no credit history is a Payday Loan.

● Your application approval time is minimal, and you can get your borrowed amount in cash or wired to your account within several minutes or hours.

A payday loan does not require a credit check but is extremely risky nonetheless.

● It is extremely risky as the interest rates of these loans are extremely high.

● The repayment dates are also very brief and you must pay your dues within a couple of weeks (sometimes within a week).

If you cannot handle the payday loan well, you will end up in a financial debt spiral.

There are safer options to choose from unless you want an action-packed week or two.

Personal Loans

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Some trustworthy lenders offer personal loans to people without a credit history report.

● You can have extended repayment periods on a personal loan.

● This extended period allows you to pay your debt back in equal amounts gradually over several months rather than weeks.

● The interest rate of a personal loan is more affordable and reasonable than a payday loan.

For people with no credit, it is one of the best options as a personal loan can help you build credit (if you don’t miss your due payment in time), unlike a payday loan.

It is more convenient and easier than applying for and getting approved for a loan from a bank or a credit union.

● You can get your application approved within minutes and receive your borrowed amount within a few hours or a day (that too without leaving your home).

No-Credit Check Loans

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Some companies can offer you a loan without going through your credit history. 

● Your credit score does not get influenced by these loans, as they are not reported to the credit bureau for evaluation.

It is hard to transition into lower-interest loans as these no-credit-check loans are expensive and have a high interest rate.

● A payday loan is the most common no-credit check loan.

● These loans have a short repayment time and offer only certain amounts.

● It is hard to repay such loans due to their high interest rates.

You must only consider borrowing this loan if you don’t have any other option left and are sure you can repay the loan within a few weeks.

Failing to do so will land you in a debt spiral where recovery is near impossible.

Getting Approval for Loans Without a Credit History

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You will need your smartphone, government-issued ID, and proof of income to apply for such loans, and it usually takes 3 minutes to get approved without a credit history.

Finding a Lender

It is easy to get a payday loan, but you must research extensively to get a loan that suits your financial needs and that you can repay at your due date.

Showing Your Income

 If you don’t have a credit history, lenders will go through your pay stubs or income proof to evaluate if you are fit for borrowing a loan.

You must fulfill the criteria such as:

1. Weekly Income: More than $285 (before deductions)

2. Bi-weekly Income: More than $570 (two weeks, before deductions)

3. Monthly Income: More than $1200 (before deductions)

Adding a Co-Signer

It is optional to add a co-signer but it can help you borrow a loan if your income threshold is less than required.

● If your co-signer has a great credit score, the lender is likely to sanction the loan.

Monitor Your Credit

It is important to monitor your credit as this score will help you apply for loans in the future. Make sure to time your payments so you have a positive credit score.

Conclusion

Borrowing a loan without having a credit history is hard in Canada. However, some alternatives don’t require you to have a credit history.

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