400 Credit Score: What You Can and Can’t Get Approved For in Canada

Your credit score can affect your everyday life, from shopping at the grocery store to buying a car or renting an apartment. A credit score is a three-digit number that creditors use to ascertain the likelihood of paying your bills on time. In Canada, a credit score falls between 300 to 900.

The higher your credit score, the better your chances of getting approved for financial products. Keeping a good credit score is one of the ways to build your financial freedom and security. Still, sometimes life has a way of throwing curveballs at you that can negatively affect your financial credibility. In this article, you’ll get to know the possibilities and limitations of having a 400 credit score.

What does it mean to have a 400 credit score?

Equifax and TransUnion are two credit bureaus that can calculate your credit score in Canada. While the average score varies from province to province, a score of 400 is a poor credit score. It also signifies that you’ve had significant payment struggles in the past.

Lenders consider someone with a 400 credit score as a deep subprime borrower. As such, a 400 credit score will make it difficult for you to get approved for a loan, and you may end up paying higher interest rates if you do get approved. Most landlords may deny your application or, you may have to pay a significant security deposit if you try to rent an apartment with a low credit score.

Also, some provinces in Canada allow car insurers to charge high premiums to people with lower credit scores. Employers will do soft credit check on your credit score when hiring, and you could lose an employment opportunity due to a bad credit score. With a good credit score, you can quickly get approved for financial products and save money with lower interest rates. Getting a mortgage for a house or a car can be difficult, if not impossible, with a 400 credit score.

But all hope is not lost. Having a 400 credit score is not the end of the word. You might be able to qualify for a personal loan from an alternative lender. Furthermore, if you take control of your financial situation, you can increase your credit score within a few months. Still, you might be thinking about what you can get with a 400 credit score. Let’s look at some of the questions in your mind. Shall we?

Can a 400 credit score get me a car loan?

Yes, you can, but it can be challenging to get a good deal. When getting a car loan, your credit score plays a vital role. Car dealers will have to check your credit history to finance a car in your name. Car lenders will then use your credit score to determine the interest on your car loan.

The good news is there’s no minimum credit score for a car loan in Canada today. With a 400 credit score, you can apply for a car loan with a lender that offers bad credit car loans. However, it is better to wait to increase your credit score or credit history than get a car loan with a 400 credit score.

This article is the shortened version of an article originally published on Hardbacon.ca by Arthur Dubois under the title "400 Credit Score: What You Can and Can’t Get Approved For in Canada".