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The 6 best credit cards for bad credit in Canada 2022

Reading up on credit cards? Wondering what’s the best card for me? In under 60 seconds, CardFinder narrows down your top matches without impacting your credit score, no SIN required

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Bassel Abdel-Qader

As the saying goes, past behaviour is the best indicator of future behaviour. And in that spirit, your credit history is what lenders use to determine your creditworthiness. In other words, they use your past financial history to judge how likely you’re able to repay your debts in full and on time.

If you have a poor credit history or no credit at all, then lenders either don’t trust that you’ll be timely and consistent in your repayments, or they have nothing with which to assess your risk—and lenders aren’t about to give you the benefit of the doubt.

So, how do you go about building (or rebuilding) your credit history?

One of the most effective ways to do so is through a credit card. By using a credit card responsibly, paying your monthly statement on time, and not letting your balance exceed 30% of your card’s limit (or your budget), you’ll prove to credit bureaus and lenders that you can be trusted with managing debt. And that’ll make all the difference to your credit score.

Luckily, even if you have no credit history or have run into credit troubles in the past, there are still lots of credit cards for bad credit in Canada that are easy to be approved for – most of them being secured credit cards. Secured credit cards differ from other credit cards in that they require you to provide a security deposit that’s equal to or greater than the credit limit.

The best credit cards for bad (or no) credit in Canada

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Best low interest (secured) card for bad credit

Learn more about the Home Trust Secured Annual Fee Visa

Best no fee (secured) card for bad credit

Learn more about the Home Trust Secured Visa

Best rewards (secured) card for bad credit

Learn more about the Plastk Secured Visa

Honourable mention: secured card

Learn more about the Refresh Secured Visa

Honourable mention: unsecured retail credit cards

It’s worth knowing your credit score before applying for a new card (especially if you’ve never checked!) as it might be higher than you thought. If you have a credit score above 600 and no recent history of bankruptcy or consumer proposals, it’s possible that you might qualify for a conventional credit card and may not need a secured credit card to (re)build your credit.

One retail credit card option that might be within your reach if you have fair credit are PC Financial’s Mastercards. Available in three tiers, the entry-level PC Financial Mastercard has no annual fee, no income requirements, and earns PC Optimum points that you can redeem at retailers including Shoppers Drug Mart and Loblaws banner grocery stores.

As a reminder, the two aforementioned retail credit cards are unsecured. So, while you won’t be required to provide a deposit as collateral, you must undergo a credit check and aren’t guaranteed to be approved. That’s in sharp contrast to secured cards which are specifically tailored to people with no or bad credit and have virtually guaranteed approvals, often with no credit checks required.

Retail credit cards are easier to get for a few key reasons – namely because they can encourage cardholders to spend more at the card’s affiliated retailers and often charge higher interest rates and late payment fees. If your goal is to improve your credit, you’ll want to approach using a retail card cautiously by limiting your spending, always paying off your balance in full and on time, and avoid changing your purchasing habits in the pursuit of collecting more rewards. Don’t forget, your ultimate goal is to improve your credit.

Find your perfect credit card in under 60 seconds - No SIN required

  1. Tell us a bit about yourself

    Answer some questions so we can personalize our recommendations - this won't impact your credit score

  2. Check your eligibility

    We confirm your eligibility with our partner, TransUnion. This will be a ‘soft credit check’ which you can see but lenders cannot

  3. Find your perfect matches

    We show you the cards you’re most likely to want and most likely to get

let's get started

 

Secured vs. unsecured credit cards

An unsecured credit card is what you picture when you think of a typical credit card – where you submit an application, and the lender uses your income, your credit score, and several other factors to determine your credit limit and whether you’ll be approved. There is no collateral for this credit card, and you pay off your purchases each month, and in some cases, earn rewards like points or cash back.

If you have a low credit score, no credit score, or you’ve been discharged from bankruptcy, you may not qualify for an unsecured credit card. Instead, you can choose a secured credit card.

A secured credit card is guaranteed by a cash deposit – usually one or two times the amount of your credit limit. This deposit secures your loan with your card issuer who will hold it as long as you have your secured credit card. Since secured cards are backed by a deposit, they’re not as risky for lenders, which is why they are accessible to almost everyone including people with bad credit and usually have no income requirements. It’s no surprise then that secured credit cards are the easiest credit cards to get.

You can use your secured credit card just like an unsecured credit card. You can shop online, book travel, and use it for your daily spending. Also, just like an unsecured credit card, you should aim to pay off the balance in full every month.

Secured and unsecured credit cards report their cardholder’s activities to credit bureaus, which means both can be used to build credit history. In contrast, prepaid credit cards and debit cards don’t report activity to credit bureaus and therefore won’t help to build or repair your credit.

What is a bad credit score?

Your credit score is a number used by lenders to determine your trustworthiness as a borrower. It’s a number between 300 – 900, and the higher the score, the better. Many factors go into determining your credit score, such as the age of your oldest credit account, your payment history, the types and size of credit you have, and whether your credit products are often close to their limits.

Most credit card providers require a credit score of at least 600 to qualify for an unsecured credit card, but if your credit score is below that threshold, don’t worry, you can improve it.

 

How to improve your credit score?

If your credit score is too low to qualify for an unsecured credit card, here are the ways you can improve your credit score:

  • Apply for a secured credit card and never miss a payment
  • Pay down the balances on any revolving credit agreements (such as your credit card) to less than 30% of the credit limit
  • Make all of your payments for services like cell phones and electricity bills
  • Keep old credit accounts open to make your credit history longer
  • Do not apply for several credit cards from many different lenders at the same time – this is called a hard inquiry and can decrease your credit score

Ultimately, improving your credit score comes down to demonstrating that you are trustworthy with credit, which means paying off your existing credit tools every month. If you do this, eventually your credit score will improve enough that you will qualify for an unsecured credit card.

Credit card options for new immigrants to Canada

If you’re a new immigrant, your credit score from your previous country won’t follow you to Canada and you’ll have to build your credit history from scratch. That can make everything from renting an apartment to getting a smartphone plan considerably more difficult.

So, if you’re a newcomer to Canada, you’ll want to prioritize building a local credit history. One of the most effective ways of doing so is by getting a Canadian credit card.

While you can consider a secured credit card, some banks have special newcomer programs that let you, as a new immigrant, get an unsecured credit card without having to go through a credit check or a Canadian credit history. That’s good news, as unsecured credit cards often provide access to rewards or better interest rates. One of the most notable of these programs is the Scotiabank StartRight Program.

It’s worth highlighting that not all new immigrants to Canada may be eligible for these programs and you may need to meet certain requirements, such as having a foreign worker or permanent residency status. That said, if you do meet the requirements, you could get a great rewards card. Scotia’s StartRight Program, for example, offers newcomers access to cards like the Scotiabank Gold American Express, which is arguably one of the best travel credit cards in Canada.

It’s important to note that most credit cards in Canada (secure or otherwise) do require Canadian residency status or at least some worker or student visa status.

Also read:

What causes bad credit?


How can you tell if you have bad credit?


What happens when you have bad credit?


Can you recover from bad credit?


Can you get a credit card with bad credit?


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