Building credit is a tricky process for many people for various reasons. For example, many people grew up with financial hardships, immigrated to Canada, or filed for bankruptcy. Whatever the reason for bad credit, there are credit cards for bad credit in Canada that banks and institutions offer.
You can build your credit back up with proper use by getting a sound card for bad credit. Getting a credit card is the fastest way to build your credit. Having a good credit score is vital for many reasons. For example, you’re more likely to qualify for better credit cards in the future and secure loans with lower interest rates.
When you face financial difficulties or have bad credit scores, there are ways to make it easier on yourself and get better credit scores by using credit more wisely. Here’s an excellent list of good credit cards for low credit that is available even for poor credit ratings. A credit score can be calculated from 300 to 900 by evaluating your credit rating in Canada. You qualify as’ good’ and can apply easily when you have an average credit score of over 600.
Types of Credit Cards for Bad Credit
If you’re wondering how to get a credit card with bad credit, Canada has several companies offering instant approval, no credit checks, or guaranteed cards. To figure out what kind of credit card is best for you, let’s look at the different available options. Then, read our other article about the best credit cards in Canada once you improve your credit with the options below!
Secured Credit Cards
These credit cards are an excellent option for those with low or damaged credit scores. Secured credit cards have high approval ratings and low fees associated. When obtaining a card, you must put down a security deposit that the credit card company uses as collateral for lending you credit. There is typically a $200 to $300 minimum fee, which becomes your beginning credit line. Depending on the card, you can put down more, which adds to the amount of credit you get each month. If you begin missing payments, the institution takes your deposit away to use as payment.
If you have paid off your credit card balance in full each month, you will begin to rebuild your credit score. If you want to cancel your account, you can get your full deposit back. These are some easy credit cards to get in Canada if you’re looking to rebuild your credit.
Guaranteed Credit Cards
Many credit card issuers offer cards you’re guaranteed to get if you meet the application requirements. These cards are great for those looking for a credit card with bad debt in Canada. Companies offering these cards often require a security deposit, but the stipulations differ from secured credit cards. Rather than the deposit corresponding to your monthly limit, guaranteed approval credit cards can give you limits greater than your deposit. The credit limit on these cards varies widely depending on the company.
These are great cards for those looking to rebuild their credit. You’re sure to boost your credit score each month when you pay off your total balance on your card.
Prepaid Credit Cards
These credit cards require no credit checks when applying. This means these cards are available to everyone. However, prepaid credit cards will not rebuild your credit. Instead, they are suitable for educating and getting people ready for a typical credit card.
When you purchase a prepaid credit card, you load a certain amount of money each month. Every time you use it, that amount lessens. It’s an excellent tool to track your spending as it functions like a gift card. You can refill the amount on it at any time. Canada has many prepaid credit card options if you’re looking for a credit card with bad credit.
Unsecured Credit Cards
An unsecured credit card is the type of credit card most people think of when they hear “credit card.” You must apply and qualify for these depending on various factors determined by the company for each card. Most traditional credit cards are unsecured since they use your credit history to decide if you qualify.
For example, credit card issuers do not require any security deposit for collateral as secured cards do. Depending on how you qualify, you get different credit limits. The better your score, the more credit you’re allowed.
There are unsecured credit cards for individuals with bad credit scores. These typically have higher interest rates and offer low lines of credit. They’re best to use minimally to avoid paying interest and build your credit score. Some guaranteed unsecured cards are easy to get for individuals with bad credit.
No-Fee Credit Cards
No-fee credit cards are an easy way to build credit in Canada without paying an annual fee.
Credit Cards for Bad Credit Canada
Neo Secured Credit Card
Plastk Secured credit card
Home Trust Secured Visa
|Credit Card||Advantage||Credit Type||Features||Fees|
|Home Trust Secured Visa||No annual fee option, instant approval||Secured||14.99% interest with an annual fee, 19.99% and no fee, $500-$10,000 credit limit||Optional $59 fee or $0|
|Scotiabank Momentum No-Fee Visa||No annual fee, no credit check, cashback deals||Secured||7.99% interest for the first six months, 19.99% after for purchases, 22.99% interest for cash advances1% cashback on qualifying purchases||$0|
|Refresh Financial Secured Visa||No credit check, high credit limit||Secured||17.99% interest rate, $200 – $10,000 credit limit||$12.95 annually plus a $3 monthly maintenance fee|
|Guaranteed Secured MasterCard by CapitalOne||Guaranteed approval||Secured||19.8% interest rate, $300-$2,500 credit limit||$59 annual fee,|
|Low Rate Guaranteed Mastercard by CapitalOne *||Guaranteed approval, high credit limit||Unsecured||14.9% interest rate on purchases and balance transfers, 19.8% interest on cash advances, $300 – $7,000 credit limit||$79 annual fee|
|Guaranteed Mastercard by CapitalOne *||Guaranteed approval, High credit limit||Unsecured||19.8% interest rate, $300-$7,000 credit limit||$59|
|Scotia Bank Value Visa||No credit history needed, low-interest rate, various benefits||Unsecured||0.99% interest for the first six months, 12.99% after, $500 minimum credit limit||$29 annual fee|
* The two unsecured Mastercards are guaranteed if you meet the requirements. However, you will be approved for the secured card if you do not meet them.
Top Credit Cards for a Poor Credit Score
Refresh Financial Secured Visa Card
As the easiest credit card to get in Canada, you’re ensured to get the Refresh Financial Secured Visa card. There is no credit check required. Depending on how much you put down as security, you can obtain a credit limit from $200 to $10,000. The annual fee only comes out to $12.95. Unfortunately, a $3 monthly maintenance fee is associated with this card. If you hold this card, you get access to Refresh Dashboard, which assists in tracking your credit and gives tips for credit building. You even get benefits with this Refresh card at over 600 retailers around Canada. These range from entertainment to shopping. Many other cards are available that are easy to get; another full-suite you can check out is the Mogo Canada credit card, loans, and more.
Guaranteed Secured MasterCard by CapitalOne
This is the best-secured credit card with a high credit limit and guaranteed approval. All you need to do is apply and pay the minimum fee of $75 or $300 to start building your credit back up! Although there is a $59 annual fee, we feel this card is still your best option for bringing your credit back up. Also, as it’s a Mastercard, you’re protected against lost, stolen, or unauthorized charges on your account.
Home Trust Secured Visa Card
The best low-interest rate secured card is the Home Trust Secured Visa card. With an annual fee of $59, you’ll pay 14.9% interest. When you apply, you are instantly approved for this card. Home Trust can offer this instant approval credit card because you are securing your credit amount. You can set your limit ranging from $500 to $10,000. Additionally, you get purchase security for 90 days after making purchases of eligible items. This Visa card is a great option to build credit while paying low-interest rates for those with bad credit.
Scotiabank Momentum No-Fee Visa – Secured Credit Card for Bad Credit
Although this Visa card is an honourable mention, it’s still a great card for building your credit. This credit card had to be included with no annual fee, no credit check required, and cashback deals. When you get this no-fee card, you’ll pay 7.99% interest for the first six months and 19.99% for purchases. For cash advances, you’ll pay a 22.99% interest rate. At gas stations, grocery stores, drug stores, and recurring bill payments, you can get 1% cashback. In addition, there are other purchases where you can get 0.5% cashback. This card also offers deals for car rentals and no extra fees for getting users an additional card.
Low Rate Guaranteed Mastercard by CapitalOne
Unfortunately, there is no guaranteed unsecured credit card Canada offers, but this is the next best. If you meet CapitalOne’s criteria, you’re guaranteed approval for this card. The card comes with a $79 annual fee but has a $7000 max credit limit and only a 14.9% interest rate for purchases and balance transfers. You’ll be paying a 19.8% interest rate for cash advances. This is an excellent choice for an unsecured credit card if you want to build your credit score. This card has a relatively low-interest rate compared to many credit cards for individuals with bad credit. As a CapitalOne Mastercard, you get excellent protection against theft, purchase assurance, and price protection services. You even get travel assistance, standard accident travel insurance, and basic car rental accident coverage.
Scotiabank Value Visa
Scotia Bank offers an unsecured credit card with a low-interest rate. This is a great card to get if you have no credit history. It’ll help you build credit if you stay on top of your payments. You’ll only pay 0.99% interest on balance transfers for the first six months of holding this card. With this low balance transfer interest rate, you can transfer a balance on a credit card with high interest to this one to lower interest payments. After the initial six months, you’ll pay 12.99% interest, which is still a very low-interest rate credit card. The annual fee of the Value Visa Card is only $29. Additionally, you get deals from various car rental companies. You can also add an authorized user to your account to give them another credit card with added benefits.
Guaranteed Mastercard by CapitalOne – Unsecured for Low Credit Scores
Although this is only an honourable mention, some may find this the best option in their case. For example, if you’re someone who knows you have the money to pay off your balance in full each month, this might be the card for you. Although it has a higher interest rate, the annual fee is lower. So if you’re paying your card off in full each month, you pay less over a year than a card with a higher annual fee but lower interest rates.
Again, it would be best if you met the necessary criteria to qualify for this card. You get up to a $7000 credit limit with a 19.8% interest rate and an annual fee of $59. Like the other unsecured cards, this is great for building your credit back up. Again, like the other CapitalOne Mastercards, this card has excellent benefits.
Plastk Secured Credit Card
The Plastk secured credit card is a great option. Use your card for everyday purchases and pay off your minimum balance to rebuild credit.
Neo Secured Credit Card
One of the top rewards cards for bad credit in Canada is the Neo secured credit card. This card allows you to earn rewards while rebuilding your credit score. This card requires a minimum deposit of $50 which is held in trust.
Neo also has an unsecured card with a credit check and a minimum credit score.
Triangle Credit Card
The Triangle credit card is also a fantastic way to earn rewards while you rebuild credit. Part of the Canadian Tire group of companies, Triangle allows you to earn Canadian tire money as part of the rewards on all of your everyday purchases.
Additional Credit Options for a Bad Credit Score
We’ve compiled a list of 7 great options for those with bad credit to consider. Some cards give instant approval, while some require applicants to meet specific criteria. All the cards have different strengths and weaknesses, which each person must weigh individually. However, there is at least one card suitable for everyone.
Best Prepaid Credit Cards for Bad Credit
Prepaid cards might also be beneficial for anyone whose bank cards are easily used for online payments. Typically, prepaid card providers cannot assess credit ratings or report to their credit rating agencies. So these cards don’t improve our credit ratings. You can only use the money you’ve loaded into the cards, so they can technically call them rechargeable debit cards.
We previously mentioned Pre-Paid Credit Cards as an option for those with bad credit. Two prepaid options are the KOHO Prepaid Visa Card and the Scotiabank Prepaid Reloadable Visa. Both cards have minimal fees and are easily reloadable.
KOHO Prepaid Visa Card
KOHO’s prepaid MasterCard cards are considered among the cheapest prepaid credit cards. The card does not charge fees each year and is designed for automatic saving and real-time data in the budgeting process. A 200% bonus for the first purchase with the KOHO Visa Card is included.
STACK Prepaid Mastercard
Stack Master cards have similar functions as KOHO. This app is rechargeable and allows you to pay anywhere worldwide. The phone also contains an App which helps with budgeting and analysis of the amount. List some of the advantages that STACK MasterCard offers.
Sometimes a credit card may not be what you need; if you need to consolidate some debt or need a large sum for an unexpected expense, you should check out bad credit personal loans for Canadians.
A credit builder loan is also a great way to rebuild your credit with equal monthly payments while getting extra liquidity. The responsibilities are more direct than using a credit card.
Store Credit Cards
Another option for those with bad credit is to go through a store to obtain a credit card. Most stores with credit cards typically allow individuals with bad credit to qualify. With these cards, you get great benefits for in-store purchases. However, they usually have high-interest rates along with annual fees. Check out a local store you shop out for more details!
Can I get approved for a credit card with a score of 500?
It’s possible to obtain credit cards with a score of 500. The best credit card with $5000 credit is the Credit One card which has the potential for auto-renewal of credit and offers an annual fee of $50 for the first year.
They will pull your credit report and check your payment history, which can greatly affect your ability to get a credit card.
What type of credit card is usually given to someone with bad credit?
Secured and Unsecured Credit Cards are available for people with a low credit score. A secure credit card requires a deposit in a saving account. Credit utilization percentages typically determine the limits of a credit card.
What is Credit Utilization?
Credit utilization is the amount of credit you use across all your credit accounts. The amount of money in your savings account does not impact this value.
The credit card issuer will first look at your utilization to ensure you are not over-leveraged.
When to change from a secured to an unsecured credit card?
Having secure credit can significantly improve your credit score if you try improving a particular type of credit card, but you should switch back to an unsecured credit card later. Unsecured credit cards also offer numerous benefits that most people would prefer. However, unsecured cards are likewise riskier. So how to choose between secured and unsecured credit cards? These decisions are taken individually and depend on whether or not one is prepared for the task.
Secure vs. unsecured credit cards
Unsecured credit cards are similar to typical credit cards in that the lender uses several different factors to assess the credit score and the credit rating of the person applying for the credit card. It is possible to earn points for purchases and earn money for purchases in some instances. Those with low credit ratings are eligible for no credit or bankruptcy protection. Instead, you could use secure credit cards.
What is a bad credit score?
Your credit rating from credit bureaus determines your ability to repay your credit card balance. The average was 300 – 900, and the better the scores. Several factors can be considered when determining the quality of your credit scores. A credit card provider typically requires a credit score above 700 to apply for an unsecured credit card, but getting a score below is not necessary.
You can get a free credit report from many of the above companies or the credit bureau itself.
What is the minimum credit score for a credit card?
There’s no credit score required to obtain a credit card. Some credit cards don’t even check applicants’ credit scores; they need you to earn money before spending.
How can I improve my credit score?
How can I improve my credit score based on my previous credit history? Depending on your current score, you can start with an unsecured for free or secured card if you have a deposit to guarantee it. Another option is to use a credit builder loan, a loan with small monthly payments you are sure to make.
In the end, after using these products and making the monthly payments, you’ll gain enough credit that you can increase your score and access cards with better rates.
Why Choose One of These Cards?
Finding a suitable credit card for your needs isn’t always easy for those with bad credit. Even worse, you find a credit card you think fits, but you get turned down. Here, we presented a list of credit cards with many companies offering guaranteed approval.
No matter the type of card you obtain, pay off at least the minimum monthly credit card balance to increase your credit score. Also, keep your balance around or below 30% of your credit limit when using your card for the best improvement results. Hopefully, this has helped you find a suitable credit card and given you some ideas to improve your credit!
How long does bad credit stay on your credit report in Canada?