If you want good rates, however, you’ll need a prime (“A”) lender to approve you.
The challenge is, “A” lenders want to see re-established credit before they’ll consider an application. As a rough rule of thumb, that means two years of perfect repayment history, with at least two or more accounts.
Lendit Financial offers a second type of option. It’s called the Lendit GIC Investment Loan.
With the GIC Investment Loan you make monthly payments. Those payments are then reported to the credit bureaus. After a period of perfect repayment (of the GIC Investment Loan and all other accounts), people generally see a noticeable improvement in their credit score.
In return for providing this service, Lendit charges 12.99% interest on its loans. That’s not cheap but it’s less than a credit card, commensurate with the borrower’s risk, and is offset by GIC interest. (In addition to paying interest, you accrue GIC interest ranging currently from 2.6% or 3.2%, depending on the term you pick.)
“Virtually everyone is approved,” says Lendit CEO Michael Wendland.
Lendit currently offers these term/amortization options:
- 3-year ($2,300 loan) with $78/month payment
- 3-year ($3,200 loan) with $108/month payment
- 5-year ($5,500 loan) with $126/month payment
Wendland says the larger the loan, the bigger the effect it has on your credit rating. The 5-year $5,500 option is offered because “some A lenders want more than $5000 re-established out of bankruptcy,” he says.
Other things to know:
- A $300 “administration fee” applies to Lendit’s loans (This is relatively reasonable given the fees charged each year by certain secured credit card companies)
- Payments are automatically debited from your bank account on the due date each month
- At the end of each term you receive the proceeds of the GIC that is placed in your name. This often serves as “forced savings for a down payment,” says Wendland.
- This program is available in every province except Quebec.
- Lendit is one of the “only lenders in Canada that can lend before bankruptcy is discharged,” according to Wendland.
Rob McLister, CMT