What a 600-649 score means
In Canada, your credit score, typically ranging from 300 to 900, is a numerical representation of your creditworthiness. A score between 600 and 649 is generally considered "fair" or "subprime." You're not in the riskiest category, but some lenders may still price in extra caution, such as higher interest rates.
Your loan options
Online Lenders
Many specialize in fair-to-poor credit with flexible criteria and fast processes, though rates run higher to offset the risk.
Credit Unions
Member-owned institutions that often take a more personalized approach and may consider your individual circumstances.
Secured Personal Loans
Using a car or home as collateral can improve your approval odds and reduce your interest rate.
Co-Signed Loans
A co-signer with good credit essentially guarantees the loan, meaningfully improving your odds and rate.
What rates to expect
Expect higher interest rates than excellent-credit borrowers — typically 15% to 30% or more, depending on the lender, amount, and term. Terms usually run 12 to 60 months. A longer term lowers your monthly payment but increases the total interest paid, so review the full agreement carefully before committing.
Tips to get approved
- Shop Around: Compare rates and terms from multiple lenders, especially credit unions and specialists in your range.
- Provide All Necessary Documentation: Proof of income, employment, and residency, organized and ready.
- Demonstrate Stability: A stable job history and residency reassures lenders.
- Explain Past Credit Issues (If Applicable): Being open about past hardship and your recovery can work in your favour with some lenders.
- Consider a Smaller Loan Amount: A smaller ask reduces the lender's risk.
Improving your credit
- Pay Your Bills on Time, Every Time: Set up automatic payments to avoid missed due dates.
- Keep Credit Utilization Low: Stay under 30% of your available credit across cards and lines of credit.
- Check Your Credit Report Regularly: Dispute any inaccuracies you find.
- Don't Close Old Accounts: Keeping fee-free accounts open supports your credit history length.
- Diversify Your Credit Mix (Responsibly): Different credit types managed well show lenders you're reliable.
- Consider a Secured Credit Card or Credit-Builder Loan: Designed to help build positive payment history.
Alternatives to consider
- Borrow from Friends or Family: Avoids lender fees and interest for those with the option.
- Payday Loans (Use with Extreme Caution): Very short-term and high-cost — only for genuine emergencies, repaid immediately.
- Debt Consolidation (If Applicable): A consolidation loan or debt management plan can lower interest and simplify multiple payments.
- Build Your Credit First: Sometimes the best "loan" is the one you don't take yet — improving your score first unlocks better terms.
By diligently implementing the credit-building tips outlined above, you'll likely qualify for better rates and terms in the future.