How to obtain credit?

Are you planning to apply for a loan? To simplify matters, your advisor needs to know some things about you. Here are some suggestions:

1. Bring your pay stub and your last report card or transcript (if applicable).
2. Bring a copy of your budget Budget: Complete list of all the estimated spending and income of a business or an individual.   to show that you are able to repay the loan.
3. Your life experiences are important. Tell your advisor about yourself, your projects, your jobs, your hobbies and your social activities.

Gather all the pertinent information that shows you are trustworthy and able to meet your obligations and repay your debts. These are good habits that will make the process a whole lot easier!

When you apply for credit, different factors are taken into consideration:

1. First, your ability to repay the loan or debt capacity is evaluated. The higher and more stable your income, the easier it is to repay the loan capital Capital: Amount of money that you have available to spend or invest.   and interest.

2. Your credit rating Credit rating: Record of your financial reputation, in particular your ability to repay loans, published by a credit bureau. Financial institutions use your credit rating to assess the risk of lending you money.   is extremely important. Creditors will check your credit rating and repayment record before lending you the money.

As a consumer, did you know that you are entitled to know your credit rating? For further information, visit Equifax, TransUnion Canada or any other credit bureau Credit bureau: Information centre on consumer credit use.   affiliated with these major companies.

Credit can come from a variety of sources. You may obtain a loan from:

• friends and family
  Also known as love money, this type of credit is often favoured by young adults. It has a number of advantages (negotiating the interest, flexible payment terms, etc.). A word to the wise: there are disadvantages to borrowing from your family or friends, particularly if you have trouble repaying them! It would be a shame to quarrel over money with a friend or family member.

• financial establishments
  Credit is usually obtained from financial establishments in the form of personal loans, mortgages, lines of credit Line of credit: Amount of money determined by a financial institution that you can use in exchange for paying interest fees.   or credit card Credit card: Plastic card issued by a credit company (e.g., VISA) that you can use to make purchases on credit and pay for them at a later date. s.

  If you have a co-signer, it’s important to be sure that you can make your payments on time. If you don't, your co-signer will have to foot the bill, and your creditor will come knocking on his door. Prudence and sound financial planning are the best policy!

• retail establishments
  Many stores and retailers offer their own credit cards to customers who purchase their products. Some stores also offer financing: giving customers the option of making several monthly payments or postponing the payment to a later date.

  However, watch for credit charges, which are usually much higher than those for regular credit cards, if you do not pay your balance on the required date.

  In a similar vein, Desjardins offers Accord D financing, an attractive finance plan that you can use at over 5,000 retailers in various retail sectors.

  To find out more about Accord D financing

• loan or mortgage companies
  There are companies that specialize in making loans, often to those who have been refused by traditional credit sources. The creditors assume a greater risk, so the interest rate is often very high.

• from yourself!
  Some people can also borrow money that they themselves have saved, by using their investments or insurance policies, for instance. The Home Buyers' Plan allows people to borrow from their RRSP to purchase a first home.

There are also credit sources you would be well advised to avoid, such as pawnbrokers, which could cost you more than you bargained for!

Pawnbroking is a form of credit where you leave a personal item on consignment (television, DVD player, bike, MP3 player) in exchange for a loan or cash. The loan is for a fraction of the consignment item's value.

Both parties then agree on a payment due date, when the borrower has to repay all the capital, plus very high interest (the law allows a maximum rate of 60%) in exchange for the consigned item. Or, the borrower may just pay the interest due and agree on a second due date.

If the payment is late, the consigned item may be sold. Stolen goods sometimes reappear in pawnshops.

There are other credit sources that could meet your needs, like the VISA Desjardins card FOR STUDENTS ONLY or the Student Advantage Line of Credit. Before resorting to a pawnbroker, talk to an advisor at your caisse. Think about the consequences before taking out a loan that could cost you a lot, and that you will probably regret.