Loans and lines of credit | Scotiabank Canada (2024)

FAQs

What credit score is needed for a line of credit Canada? ›

A good credit score is recommended to get a line of credit. Some credit lenders will give you an LOC with scores around 660. However, the ideal score for approval is 720 or higher. Some private lenders will give lines of credit to those with bad credit, but those do have higher rates.

Your loan plus interest gets repaid over an agreed-upon length of time. A line of credit gives you ongoing access to funds that you can use and re-use as needed. You're charged interest only on the amount you use.

Yes. While you may not be able to qualify with a bank or credit union, some online lenders offer lines of credit for bad credit in Canada. However, high interest rates typically apply.

A line of credit is a preset borrowing limit that can be used at any time, paid back, and borrowed again. A loan is based on the borrower's specific need, such as the purchase of a car or a home. Credit lines can be used for any purpose.

To land one, you'll need to present a credit score in the upper-good range — 700 or more — accompanied by a history of being punctual about paying debts. Similar to a personal loan or a credit card, an unsecured personal line of credit gets bank approval based on an applicant's ability to repay the debt.

When you first open a line of credit, your score could suffer by a few points (similar to opening a credit card account or mortgage). This is due to the fact that the lender will want to run a hard inquiry or a "hard pull" to gather insights about your creditworthiness.

Lenders often have higher credit score requirements for lines of credit compared to personal loans. For example, borrowers should aim to have a minimum credit score of 670 when applying for a line of credit. However, there are personal loans available that only require scores of at least 580.

Potential downsides include high interest rates, late payment fees, and the potential to spend more than you can afford to repay.

In Canada, credit scores range from 300 to 900, 900 being a perfect score and 300 the lowest. According to data from a 2022 survey, the average credit score in Canada is 672, and 694 in British Columbia. Your credit score is used by lenders to determine what kind of borrower you are.

What is the easiest loan to get right now? ›

To do so a person would need to demonstrate a long history of managing their credit responsibly. They would need to have years of consistently paying bills on time, keeping credit utilization below 30%, regularly checking their credit report and nurturing healthy financial habits.

A line of credit is a type of loan that lets you borrow money up to a pre-set limit. You don't need to use the funds for a specific purpose. You may use as little or as much of the funds as you like, up to a specified maximum. You may pay back the money you owe at any time.

While credit cards can be great for everyday purchases, a line of credit can help you cover unexpected expenses, such as emergency repairs. It can also temporarily fill cash flow gaps. Here are some benefits to using a line of credit instead of a credit card: Interest rates are lower than many retail credit cards.

With a HELOC you are able to access the money over and over again as long as you continue to pay it off in between. A standard mortgage, on the other hand, does not allow you to re-advance funds. Once you have paid off your mortgage, the only way to borrow that money again is to refinance your mortgage.

While you may still be able to get approved for credit with this score, you may be limited in options. If you do get approved, your interest rate may be higher than it would be with a higher credit score. Plus, the loan amount or credit limit you have access to may be limited.

Most lenders require a minimum credit score of between 600 and 650, but some lenders specialize in bad credit personal loans. It may be more challenging to find a lender willing to work with you, but obtaining a loan with a 550 credit score is possible.

An unsecured personal line of credit requires a credit score of at least 680, generally speaking. If your score needs some work, you may want to seek out an alternative form of funding. A personal line of credit doesn't have a set borrowing limit.

Christie Matherne, Credit Card Writer

The credit limit you can get with a 750 credit score is likely in the $1,000-$15,000 range, but a higher limit is possible. The reason for the big range is that credit limits aren't solely determined by your credit score.