Lines of credit for bad credit in Canada

If you’ve got bad credit, it’s often difficult to get approved for a loan from traditional lenders like banks and credit unions. The good news is that there are private lenders that offer lines of credit for bad credit in Canada. The bad news is that steep interest rates usually apply.

Keep reading to compare five loan options and find out how to get approved for a line of credit with bad credit in Canada.

5 popular lines of credit for bad credit

Learn about the features, benefits and drawbacks of these providers offering lines of credit for bad credit.

• Loans Canada
• LoanConnect
• Cash Money
• MogoMini
• Fora

• How we selected popular lines of credit for bad credit

  We’ve chosen the products on this page based on the providers available through Finder and online in the Canadian line of credit marketplace. These lines of credit are not representative of the entire market. When choosing popular lines of credit for bad credit, we considered each lender’s time in business, online presence, rates, fees, borrowing limits, funding speed, provincial availability, borrower perks and customer feedback. No single line of credit will be the best choice for everyone, so compare your options before applying.

1. Loans Canada line of credit

Loans Canada is an online broker with the largest network of lenders in Canada. Established in 2012, it allows you to fill out a single online application and then compare offers from a range of lenders. Bad credit is accepted, and you’ll be able to access your loan funds within one to three business days.

Line of credit details

• Loan amount: $300 – $50,000
• Loan term: Open
• APR: 6.99% - 46.96%
• Eligibility requirements: Canadian resident, age of majority in your province of residence
• Serviced provinces: All of Canada

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2. LoanConnect line of credit

Online broker LoanConnect can help you find a line of credit through its network of lenders. You can apply online within minutes and then let LoanConnect match you with a suitable line of credit lender. LoanConnect also works with borrowers with all types of credit.

Line of credit details

• Loan amount: $100 – $50,000
• Loan term: Open
• APR: 6.99% - 46.96%
• Eligibility requirements: Canadian citizen or permanent resident, age of majority in your province of residence, current debts must total less than 60% of your income
• Serviced provinces: All provinces

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3. Cash Money line of credit

Cash Money doesn’t just provide payday and installment loans – it also offers lines of credit. You can apply for a loan and verify your income online, while in-store and phone applications are also accepted.

Line of credit details

• Loan amount: $500 – $10,000
• Loan term: Open
• APR: 46.93%
• Eligibility requirements: 18 years old with a valid ID, open and valid chequing account in your name, working telephone number, steady source of income
• Serviced provinces: AB, BC, MB, NB, NL, NS, ON & SK

4. MogoMini line of credit

MogoMini is a line of credit offered by Vancouver-based fintech Mogo. You can apply online and get pre-approved in less than five minutes, with bad credit borrowers accepted and low minimum income requirements.

Line of credit details

• Loan amount: $1,000 – $3,500
• Loan term: Open
• APR: 47.42%
• Eligibility requirements: Canadian resident, age of majority in your province of residence, annual net income of $13,000
• Serviced provinces: BC, AB, SK, MB, ON, NB, NS, NF, PEI, NU, NT

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5. Fora line of credit

Fora offers an unsecured line of credit to suit borrowers who may not meet the credit score requirements of traditional lenders like banks and credit unions. You can apply and verify your bank account online, and when you need to access funds from your line of credit, they can be deposited into your bank account on the same business day.

Line of credit details

• Loan amount: $1,000 – $10,000
• Loan term: Open
• APR: 46.90%
• Eligibility requirements: Steady source of income
• Serviced provinces: AB, BC, ON and SK

How does a line of credit work?

A line of credit is a type of flexible loan that allows you to access funds as and when you need them. Once you apply for a line of credit, you’ll be approved to access credit up to a predetermined limit. You can use a portion of your credit limit or the full amount — it’s up to you — and you can use the money for any purpose.

Unlike a personal loan, a line of credit is open-ended. If you need to access additional funds, you can do so without having to apply for new credit. You’re also charged interest only on the amount you borrow, not on the full credit limit, and lines of credit typically come with lower interest rates than personal loans or credit cards.

A line of credit can either be secured or unsecured:

• Secured lines of credit. This type of line of credit is backed by collateral, allowing you to access a higher credit limit and better interest rate. However, you put your asset at risk if you default on your payments. A home equity line of credit (HELOC) allows you to secure the credit against the equity in your home.
• Unsecured lines of credit. With no collateral to secure the loan, unsecured lines of credit have higher interest rates. You’ll often also need to meet stricter eligibility requirements to qualify for an unsecured line of credit.

Can I get a line of credit if I have bad credit?

Yes — but not from all lenders. Banks and credit unions have strict lending eligibility criteria, so it’s highly unlikely you’ll get approved by a traditional lender.

However, many online lenders specialize in working with bad credit borrowers. You can apply through the lender directly, or use an online broker who can match you with a lender that suits your needs.

Rather than focusing on your bad credit score, these lenders will consider other factors when assessing your credit application, such as:

• Whether you are in steady employment or not.
• Your monthly income.
• Your debt-to-income ratio and whether you can afford to pay back what you borrow.
• The collateral you can offer, if you apply for a secured line of credit.

Features of lines of credit for bad credit

If you’re applying for a bad credit line of credit, keep an eye out for these features:

• Unsecured or secured. Online lenders typically offer unsecured lines of credit for bad credit, but many also offer HELOC options if you own your home.
• High interest rates. Interest rates on lines of credit for bad credit can be as high as 47.42%. With this in mind, it’s a good idea to make more than the minimum monthly payment to minimize the interest that accrues.
• Fixed rates. Line of credit interest rates for bad credit are usually fixed, which means your rate will stay the same.
• Lower credit amounts. Online lenders tend to offer smaller credit limits than the banks. And if your credit score is less than perfect, you can expect to qualify for a lower amount than someone with excellent credit.
• Improve your credit. Making on-time payments on your line of credit can help you rebuild your credit score.

Before you apply for a line of credit, ask yourself whether it’s the right choice. Borrowing more than you can afford is only going to damage your credit score further, and steep interest rates can have a big impact on the total cost of borrowing. It might be worth paying down your current debts first and improving your credit score before you consider applying for any credit.

Home equity lines of credit with bad credit

A home equity line of credit (HELOC) is a secured line of credit that lets you borrow against the equity in your property. And because you offer your home equity as collateral, your credit score is not as important a factor as it is when you apply for an unsecured loan.

As a result, many online lenders offer bad credit HELOCs. However, your poor credit history increases the level of risk for the lender, so higher interest rates will apply. Title search fees, admin fees, legal costs and property appraisal fees may also apply, so check the fine print closely.

Remember, taking out a HELOC means putting your home at risk if you default on your payments.

Can I get a guaranteed line of credit with bad credit?

No. Be very wary of any lender that advertises “guaranteed” approval. This is a common red flag that could indicate a loan scam, so the safest thing to do is steer clear.

While there are plenty of legitimate online lenders, there are also plenty of fraudsters and scammers. Do your research to make sure a lender is properly registered and licensed in your province, and read customer reviews to find out whether they’re trustworthy.

How to get approved for a line of credit with bad credit in Canada

Even if your credit score is poor, there are several simple things you can do to increase your chances of getting approved by a legitimate lender:

• Check your credit report. Find out what your credit score is to get a better idea of which lenders may be willing to work with you. You can also check whether there are any inaccuracies in your credit report that need to be fixed.
• Pay down your debt. Your debt-to-income (DTI) ratio is a key factor lenders will consider when you apply for credit. By taking the time to pay down your existing debts, you’ll ensure that a smaller portion of your income goes towards paying back what you owe. Lenders typically want to see a DTI below 40%, but lenders of lines of credit for bad credit are open to higher DTIs.
• Apply for a smaller amount. If you’re applying for a HELOC with bad credit, reducing your loan-to-value ratio (the amount you want to borrow relative to the value of your home) can increase your chances of approval.
• Provide supporting documents. Provide any documents the lender requests to prove that you are a low-risk borrower. For example, bank statements and pay stubs can prove your income, a reference letter from your employer can reinforce the fact that you are in stable employment, and evidence of other assets you own can also help sway the decision in your favor.
• Get a cosigner. Finding someone with strong credit who is willing to cosign your loan will also boost your chances of getting approved. However, that person will have to step in and cover the repayments if you fall behind.

How to apply for a line of credit for bad credit

It’s easy to apply for an online personal line of credit for bad credit. Here’s what you need to do:

1. Compare your options. Compare lenders to find out about their eligibility requirements, line of credit amounts and interest rates. You can do your own research or go through a broker to find the loan that’s right for you.
2. Submit your application. Fill out an online application form with your name, contact details and income and employment information.
3. Provide supporting documentation. You’ll need to provide proof of ID, such as your driver’s licence or passport, and bank account information to prove your income.
4. Get funded. It’ll typically take between one and three business days to get approved and funded. You can then withdraw from your available credit as needed to fund any expenses.

Frequently asked questions

• Can you get a line of credit with bad credit Canada?

  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.

• Is taking out a line of credit bad?

  It depends on your situation. A line of credit can be a convenient way to cover unexpected expenses, but it requires discipline in spending and making payments. Also, if you have bad credit, be aware that high interest rates will apply when you access credit.

• How can I get a line of credit for bad credit in Ontario?

  If you have bad credit, you can apply for a line of credit from an online lender that offers loans in Ontario. These lenders will look past your credit score and consider your employment, income and existing debts to determine your ability to pay back what you borrow. However, you'll need to watch out for steep interest rates.

• Can I get a student line of credit with bad credit?

  Yes, it may be possible to qualify for a student line of credit to finance your university education if you have no credit history or bad credit. However, you may need a co-signer, such as a parent, in order to qualify.

• How much can I borrow with a line of credit for bad credit?

  Lines of credit for bad credit typically have limits up to $10,000.