In a Nutshell: Consumers with less than perfect credit may feel hopeless when a situation arises where they need some extra cash fast. Banks may turn down applicants for what they consider bad credit, and people often turn to payday lenders that impose exorbitant fees and high interest rates. Magical Credit provides an alternative for nonprime borrowers in Canada to gain access to short-term loans quickly. The company provides a fast and easy application process, and many people who are approved receive their cash within one day. Magical Credit looks beyond credit scores to get a full picture of each borrower’s unique circumstances and bases its decision on its own internal scoring system.
Nearly everybody needs a loan at some point in their life, whether it’s for a major life event like buying a house or just needing a few thousand bucks to cover an unexpected expense.
But many people have also made a few missteps along their financial journey that may have caused some major dings to credit scores. In the past, low credit scores have severely limited one’s options when it comes to securing a loan or financing a purchase.
Lenders see a low score and deem these potential borrowers as high-risk and often turn them away for loans that may be extremely important for the applicants. This is when people can easily dig themselves deeper into a financial hole by turning to sketchy payday lenders who charge exorbitant fees and interest rates.
Additionally, people who don’t easily have access to traditional financial institutions and services may also be forced to consider alternative financing options.
But folks in Canada who have low credit scores or who lack access to credit services can turn to Magical Credit. The company offers another option for people to secure quick and easy short-term loans without having to turn to predatory lenders or other potentially hazardous resources.
“There’s a massive demographic out there of non-prime borrowers,” said Magical Credit Chief Risk Officer Kevin Silver. “And there’s also a massive underserved market that exists in Canada of people who simply don’t have access to traditional sources of borrowing.”
We recently chatted with Silver about how Magical Credit works to meet the needs of these nontraditional borrowers.
Looking Beyond Traditional Measures to Determine Applicant Creditworthiness
Silver explained how, just because a person has a credit score that may not be appealing to banks, they may still be a good candidate for a loan from Magical Credit.
“Bad credit is in the eyes of the beholder,” he said. “Someone at the bank will say ‘You have bad credit, we’re not lending to you.’ In our eyes, maybe you have great credit. It really depends on the person’s situation or story. We don’t go off a credit score; we look way beyond a credit score.”
Silver said Magical Credit tries to get as much information as possible when speaking to potential customers, including what their personal story is, what they are trying to accomplish, how much money they need, and what monthly amount they are comfortable with paying back.
“And we generate our own internal score using some different tools that we have — based off of credit bureaus, based off of bank statements,” he said. “That’s because we want to generate what we determine as good or bad credit.”
In working with low-income households, Magical Credit accepts government subsidies as well, including unemployment insurance, workers comp, maternity leave, child tax credit, and pensions, among other sources of income, according to the company. Complete information about what qualifies as a government subsidy in provinces across Canada can be found on the Magical Credit website.
“Obviously, we try to lend to as many customers as we can,” Silver said. “Because we understand the dynamics, we understand the business, and we really just want to try to cater to as many people as possible.”
A Convenient and Easy-to-Use Online Platform that Offers a Variety of Loans
“At Magical Credit, we don’t believe in making our clients jump through hoops to qualify for a loan. We approve our clients based on their fixed monthly income — that’s it,” according to the company.
Silver said the Magical Credit team works to make the whole process as simple as possible.
“Customers find us online directly or through search engines,” he said. “They just complete our online application. It’s a few pages — simple, basic — getting contact information, personal details, and income sources.”
Silver said the company also immediately verifies banking information and information from the credit bureaus. The company also reports to both TransUnion and Equifax, something not every lenders does, which helps customers build their credit much faster through on-time payments, allowing them to build a healthy credit profile
“Bad credit can bring your plans to a grinding halt. We’re not here to judge your past, we’re here to help you build your future,” according to the company. “We’re not about making you wait. We work hard to get your bad credit loan approved and funds in your bank within 24 hours of your application.”
Upon approval, Magical Credit will contact the borrower and discuss their possible loan options.
“It’s full transparency if they have any questions,” Silver said. “We’ll go over exactly how it works, payments, interest rates — everything is completely transparent. And we don’t sell any other products so it’s a really straightforward process.”
Magical Credit offers a wide range of loan types to suit customers’ needs, whether it’s to pay childcare expenses, dental expenses, divorce, legal fees, emergencies, or simply to cover bills.
Providing a Quality Customer Experience
Magical Credit not only wants to help low-income and other non-prime borrowers secure the loans they need, but it also wants to make sure it provides a quality experience to customers.
“We speak the customer’s language to know exactly what the loan is and how much they’re borrowing, what the payments are,” Silver said. “Our loans are completely open, which customers love.”
Also, if borrowers ever have some extra cash they want to apply toward their loans to reduce the cost of interest they can do so at any time, no questions asked, he said.
This drive to provide great customer service is also the motivation behind Magical Credit’s fast and easy process.
“The way the world is trending economically, the fintech world is really moving at a fast pace with technology and the speed at which borrowers want to get access to funds,” Silver said. “The process itself has to be catered toward the needs of the people.”
Customers also love being able to have access to an unsecured loan without having to provide collateral.
“Pulling together enough collateral to secure a personal loan can be an onerous task, whether you’re a first-time borrower with few assets, or someone with a lengthy credit history,” according to the company. “Oftentimes banks and other traditional private lenders will require borrowers put up their homes, cars or other valuables as a guarantee that they will be able to make good on their debts.”
Even then, banks may still deny loan requests.
“In a very real sense, you are your own collateral,” according to the company. “We are strong believers in the importance of making financing accessible to Canadian consumers with imperfect credit. Whether you need cash in hand to meet a one-time business expense that will help you increase your regular earnings and build working capital, or you’re looking to consolidate your debts into one tidy monthly payment, a short-term cash loan can be the difference-maker.”