09/01/2026
Are We Really Doing “Alternative Lending” Anymore?
“Common-sense lending” doesn’t seem to be so common anymore.
Look at the messaging from lenders in the alternative space and you’ll hear some version of the same promise:
Send us the tough files. We look beyond the score. Tell us the story.
It’s a good message. And it’s one of the reasons alternative lending exists in the first place — for borrowers who don’t fit neatly inside a conventional box.
But then a real deal hits the desk.
And sometimes, the conversation quickly narrows down to one thing:
The credit score.
And not even just the score — the credit history.
What happened three or four years ago gets highlighted, while the direction the borrower is moving in today doesn’t always seem to receive the same weight.
That is what I’m struggling with.
The question I keep asking
If a client checked every box and had perfect credit, they would probably qualify on the A side.
So why are we having an alternative lending conversation in the first place?
The B/alternative market exists because clients don’t fit the conventional box perfectly.
That doesn’t mean every deal should be approved.
It doesn’t mean credit doesn’t matter.
It means we should be willing to understand and assess the entire risk picture.
If the only borrowers we are comfortable approving are the ones who look almost like A clients, are we really doing alternative lending?
Or are we simply offering conventional-style lending at a higher price?
A file that made this obvious
I recently had a deal that really crystallized this for me.
The income capacity was there.
The property was approximately 75% LTV.
Yes, there were credit challenges. Real ones.
But there was also something else that deserved attention:
Progress.
One of the borrowers had taken on a second job and increased their hours specifically to improve their financial situation.
The proposed mortgage would consolidate their debts, significantly improve their monthly cash flow and give them an opportunity to start rebuilding.
This wasn’t someone looking for an easy way out.
This was someone already doing the work.
The question was whether we were willing to recognize that work.
What about the 5 Cs?
The 5 Cs of lending exist for a reason:
Character. Capacity. Capital. Collateral. Credit.
Credit and credit history are certainly important. I’m not suggesting otherwise.
But credit is one part of the overall risk assessment — not necessarily the entire assessment.
A credit report tells us what happened.
It doesn’t always tell us why it happened, what has changed since, or where the borrower is headed.
If someone’s income is increasing…
If they’re working additional hours…
If their debt is being consolidated…
If their monthly cash flow is improving…
If there is meaningful equity in the property…
If the LTV is reasonable…
Shouldn’t that trajectory count for something?
A borrower shouldn’t necessarily be defined by the worst financial period of their life.
Sometimes the most important part of the story is what happened afterward.
“Tell us the story” — and mean it
Maybe it’s time to go back to what “tell us the story” was actually supposed to mean.
Not as a marketing line.
As an actual underwriting philosophy.
The question shouldn’t always be:
“Does this credit score fit my box?”
It should also be:
“Does this deal make sense when I look at the complete picture?”
Those are very different questions.
There are hardworking Canadians who don’t need someone to ignore their past.
They need someone willing to recognize that circumstances change, people change and financial trajectories change.
Sometimes the right mortgage can be the bridge that allows someone to consolidate debt, improve cash flow, rebuild credit and eventually return to conventional financing.
That, to me, is where alternative lending can make a real difference.
We don’t need lenders to take reckless risks.
We need lenders willing to take calculated, properly assessed and properly priced risk.
And as an industry, perhaps we need some honest introspection.
Are we still looking at the whole story?
Or have we become so focused on the score, the history, the guidelines, the rate and the fees that we’ve forgotten why alternative lending exists in the first place?
I’ll leave it there.
Are other brokers, BDMs, underwriters and lenders seeing the same thing?
I’d genuinely like to hear different perspectives.
