Whether you're grappling with a poor credit history or starting with a clean slate, there are many credit card options for you. We've gathered the best credit cards for bad credit in Canada.
Canada's best credit cards for bad (or no) credit at a glance
Featured
Home Trust Secured Visa Card
Access cash anytime, anywhere from over 1 million ATMs around the world displaying the Visa or Plus logo
Featured
Neo Secured Credit
Guaranteed approval and $25 cashback when you sign up for a Neo Secured Card.
Featured
KOHO Easy
Earn 1% cash back on groceries and transportation and 3% interest on your entire balance.
Our methodology: how we choose the best credit cards
Ratehub.caevaluates the best credit card rewards credit cards by considering overall consumer value and suitability for various types of consumers. Our evaluation methodology incorporates factors such as the card’s annual fee, rewards earning rates, ease-of-use, welcome or promotional offers, approval rates, eligibility criteria, and redemption choices. We have also considered the pros and cons of each card to help you determine which case best suits your financial needs and spending habits.
" } }, { "@type": "Question", "name": "How can you tell if you have bad credit?", "acceptedAnswer": { "@type": "Answer", "text": "
The best and most clear way to tell if you have bad credit is by checking your credit score online. You can do this by visiting the website of a credit bureau such as TransUnion or Equifax, entering in some personal information (your name, social insurance number, etc.) and requesting your score. You'll usually receive your score immediately when going this route, but you also may have to pay a fee for the convenience or sign up for an account (depending on the company).
If you don't mind waiting and would rather access your credit score for free, you can request a credit report by phone or in writing via fax or traditional mail.
In general, any credit score below 560 is considered a bad credit score.
" } }, { "@type": "Question", "name": "What happens when you have bad credit?", "acceptedAnswer": { "@type": "Answer", "text": "
Bad credit can have a negative impact on your financial health in a number of ways. In the world of credit itself, it means you'll have limited access to credit opportunities such as loans and mortgages, and any you manage to be approved for will likely come with higher-than-average interest. You'll also be unable to get higher-tier credit cards with rewards and perks, as those typically require a \"good\" to \"excellent\" credit score for approval.
Outside of that, your bad credit may also hinder you in other aspects of life. Employers and landlords may request a credit check (or a copy of your credit score) when applying for jobs or housing, while cell phone and insurance companies are also well-known to conduct credit checks on potential clients.
" } }, { "@type": "Question", "name": "Can you recover from bad credit?", "acceptedAnswer": { "@type": "Answer", "text": "
Absolutely! No matter how bad your credit is, there is a path forward. Repairing your credit takes time and discipline, but it can be done. While a good policy when rebuilding your credit is to rid yourself of the habits that caused problems in the past, you'll also want to take the following steps:
\n
Keep a constant eye on your credit
\n
Review your credit report on a monthly basis to make sure the work you're putting in is moving your score in the right direction. It can also be a big motivator when you begin to see the positive results of your new financial habits.
\n
Build up your credit
\n
There are plenty of ways that people with bad credit can begin to build it up again. One of the most common methods is applying for a secured credit card, which are easy to be approved for and allow you to build credit safely while using it like any other credit card. While these cards do require an up-front security deposit, using the card responsibly for a length of time may result in your provider refunding the deposit to you and upgrading you to a regular, unsecured card.
\n
Be responsible
\n
The last thing you want to do after all the work you've done is fall back into bad credit again, so make sure you continue to use your credit card responsibly and avoid bad habits such as impulsive/binge shopping and missing payments. The better you treat your card, the better you'll be treated by credit bureaus and providers.
" } }, { "@type": "Question", "name": "What is the easiest credit card to get with bad credit?", "acceptedAnswer": { "@type": "Answer", "text": "
The easiest credit card to obtain if you have bad credit is a secured credit card. This is because secured cards require a cash deposit from you in order to be activated, thus minimizing the risk on the provider's side. The best part? Because secured cards report to Canadian credit bureaus, they will actually help you build credit as you use them and pay off statements each month.
" } }, { "@type": "Question", "name": "What is the fastest way to build credit?", "acceptedAnswer": { "@type": "Answer", "text": "
The fastest way to build credit is with an easy-to-get secured credit card. Because they report to Canadian credit bureaus, secured credit cards will help you build your credit score as you regularly use them and pay off monthly balances. Eventually, you'll get your credit high enough to switch over to an unsecured card.
" } } ]}
Choosing the best credit cards for bad credit - frequently asked questions
What causes bad credit?
While there can be many reasons why someone develops bad credit, the most common are:
- Late/missed bill payments
- Maxing out your credit limit
- Defaulting on a loan
- Having an account end up in collections
- House foreclosure
- Bankruptcy
How can you tell if you have bad credit?
The best and most clear way to tell if you have bad credit is by checking your credit score online. You can do this by visiting the website of a credit bureau such as TransUnion or Equifax, entering in some personal information (your name, social insurance number, etc.) and requesting your score. You'll usually receive your score immediately when going this route, but you also may have to pay a fee for the convenience or sign up for an account (depending on the company).
If you don't mind waiting and would rather access your credit score for free, you can request a credit report by phone or in writing via fax or traditional mail.
In general, any credit score below 560 is considered a bad credit score.
What happens when you have bad credit?
Bad credit can have a negative impact on your financial health in a number of ways. In the world of credit itself, it means you'll have limited access to credit opportunities such as loans and mortgages, and any you manage to be approved for will likely come with higher-than-average interest. You'll also be unable to get higher-tier credit cards with rewards and perks, as those typically require a "good" to "excellent" credit score for approval.
Outside of that, your bad credit may also hinder you in other aspects of life. Employers and landlords may request a credit check (or a copy of your credit score) when applying for jobs or housing, while cell phone and insurance companies are also well-known to conduct credit checks on potential clients.
Can you recover from bad credit?
Absolutely! No matter how bad your credit is, there is a path forward. Repairing your credit takes time and discipline, but it can be done. While a good policy when rebuilding your credit is to rid yourself of the habits that caused problems in the past, you'll also want to take the following steps:
Keep a constant eye on your credit
Review your credit report on a monthly basis to make sure the work you're putting in is moving your score in the right direction. It can also be a big motivator when you begin to see the positive results of your new financial habits.
Build up your credit
There are plenty of ways that people with bad credit can begin to build it up again. One of the most common methods is applying for a secured credit card, which are easy to be approved for and allow you to build credit safely while using it like any other credit card. While these cards do require an up-front security deposit, using the card responsibly for a length of time may result in your provider refunding the deposit to you and upgrading you to a regular, unsecured card.
Be responsible
The last thing you want to do after all the work you've done is fall back into bad credit again, so make sure you continue to use your credit card responsibly and avoid bad habits such as impulsive/binge shopping and missing payments. The better you treat your card, the better you'll be treated by credit bureaus and providers.
What is the easiest credit card to get with bad credit?
The easiest credit card to obtain if you have bad credit is a secured credit card. This is because secured cards require a cash deposit from you in order to be activated, thus minimizing the risk on the provider's side. The best part? Because secured cards report to Canadian credit bureaus, they will actually help you build credit as you use them and pay off statements each month.
What is the fastest way to build credit?
The fastest way to build credit is with an easy-to-get secured credit card. Because they report to Canadian credit bureaus, secured credit cards will help you build your credit score as you regularly use them and pay off monthly balances. Eventually, you'll get your credit high enough to switch over to an unsecured card.
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Best secured credit cards by category
Your credit history is what lenders use to determine your creditworthiness. Your past financial history judges how likely you’re able to repay your debts in full and on time. If you have a poor credit history or no history at all, lenders may not trust that you’ll be timely and consistent in your repayments. You can improve your credit history by using your credit card responsibly. This will show lenders that you can manage debt well and improve your credit score over time. Whether you have a poor or non-existent credit history, there are still lots of credit card options out there - 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.
To help you improve your credit, we've gathered the best credit cards to build or rebuild in Canada.
Best overall (secured) credit card for bad credit
featured
Minimum security deposit
- Pay $8.33/mo in interest
Based on a credit balance of $500
- Annual fee
$0
- Perks
- Details
Perks
- Ratehub.ca’s 2023 Award Winner – Best Credit Card For Building Credit
- Get $25 cashback1 when you sign up, plus up to 15% cashback
- 2 on first-time purchases at 10,000+ partners
- Safely build your credit history
- Free credit reporting
- No credit score needed to apply
- Instant, unlimited cashback at over 10,000 partners
- Get up to 15% cashback3 on first-time purchases
- Enjoy an average 5% cashback3
- Guaranteed 0.5% cashback
- Flexible credit limit
- Get started with as little as $50
- Increase your credit limit any time
- Sign up in 3 minutes and use your virtual card right away
- Optional monthly subscriptions available to boost your rewards for travel, gas & grocery, dining, and more
Ratehub’s take
The Neo Secured Credit offers you the opportunity to earn cash back rewards – a feature that is hard to come by for a secured card. The card also comes with noteworthy budgeting features through Neo Insights and the ability to adjust your credit limit anytime.
Pros
- Cashback rewards: Cashback rewards apply to gas and grocery purchases, as well as purchases with Neo partners
- Low minimum deposit requirement: The $50 minimum deposit requirement makes this card accessible for most – many other cards require at least $500
- Customize rewards: For a low monthly fee, you can subscribe to Perks which allow you to earn rewards from your spending and benefits like airport lounge access for specific categories, such as travel or wellness
Cons
- Higher interest rate: The card’s 19.99% interest rate is quite a bit higher than some low interest cards and other secured cards
- Cash back rewards are limited: You can earn rewards on a maximum of $300 in spending per cashback category, which is quite limited, and bonus earn rates may have maximums, too
Minimum income: $50/yr Purchase interest: 19.99% Cash advance: 24.99%Eligibility requirements
Interest rates
Ratehub.ca take
Having the distinction of being the only secured card on the market to offer cash back rewards, the Neo Card (Secured) offers 5% cash back on purchases made with participating Neo partners and 1% on everything else (up to a $5000 limit per month).
There’s no annual fee to pay, and its minimum security deposit of only $50 makes it quite possibly the most accessible card on this list. Other great features include the ability to increase or decrease your credit limit on demand, an insights dashboard through their app which you can use to track spending, and an auto-pay feature to ensure you never miss a bill while you’re trying to get your credit on track.
The only visible drawback here is their purchase interest rate. While its low end sits comfortably at a standard 19.99%, it can reach as high as 26.99% depending on your credit application and province, so read the fine print on your contract and make sure you’re getting a rate you can live with.
Pros:
- No annual fee
- Only secured card on the market with cash back rewards - earn 5% on store purchases with Neo retail partners and 1% on everything else
- Increase or decrease your credit limit on demand
- Insights dashboard helps you keep track of your spending
- Auto-pay feature keeps you from missing bills
- Very low minimum security deposit of $50
- No hard credit check, excluding Quebec applicants (hard credit inquiries may have a negative impact on your credit score)
Cons:
- Purchase interest rate can go as high as 26.99% depending on your application and home province
Best no fee (secured) credit card for bad credit
featured
Minimum security deposit
- Pay $8.33/mo in interest
Based on a credit balance of $500
- Annual fee
$0
- Perks
- Details
Perks
Not available to residents of Quebec.
- The Home Trust Secured Visa Card is a credit card that requires a security deposit for eligibility. Your credit limit is then set at the amount of the deposit. You can put down as little as $500, or as much as $10,000.
- Make purchases over the phone or online
- Plan and book a vacation
- Access cash anytime, anywhere from over 1 million ATMs around the world displaying the Visa or Plus logo
- Shop at over 24 million locations worldwide
- Applicants who have been discharged from Bankruptcy are eligible to apply at any time (Discharge Certificate may be requested)
- Applicants who are in a Consumer Proposal can apply at any time
Ratehub’s take
The Home Trust Secured Visa card is a strong choice if you want to rebuild your credit while controlling your spending. Plus, if you pay the annual fee you’ll get a lower interest rate. There are other cards out there with lower regular interest rates, though.
Pros
- Automatic credit building: When you pay your bills on time, it will be reported to the credit bureaus and help improve your credit score
- No interest charged unless you carry a balance
- Low minimum deposit: The $500 minimum deposit is low compared to other secured cards
Cons
- Interest rate is fairly high: The regular interest rate of 19.99% is fairly high and you only get the lower rate (14.99%) when you pay an annual fee – and this is still higher than comparable cards
- Few perks: Like most low interest cards, this offers few perks and no insurance coverage
Minimum credit score: 300 Minimum income: N/A Purchase interest: 19.99% Cash advance: 19.99%Eligibility requirements
Interest rates
Ratehub.ca take
The Home Trust Secured Visa Card is a no-frills card perfect for those looking to build their credit without the added pain of an annual fee. With a minimum deposit of $500, users can activate the card and make purchases virtually anywhere, with Home Trust sending regular reports to both major credit bureaus (Equifax and TransUnion). The card’s interest rate of 19.99% is fairly standard (although there are other secured cards who offer lower rates) and for -those using the card abroad or online, its 2% foreign exchange fee is lower than you’d normally find on a card of this type.
Those willing to fork out $59 for an annual fee can see their interest rate lowered to a very impressive 14.90%, but that may be a big ask for clients still trying to get on their feet financially.
While it may not feature any of the perks or rewards of other cards, those who use it responsibly will find it helpful as they build up their credit and graduate to an unsecured credit card in the future.
Pros:
- No annual fee
- Low foreign exchange fee of 2%
- Reports to both Equifax and TransUnion
Cons:
- Interest rate of 19.99% is standard for most credit cards, but there are cards with lower interest rates on the market right now
- Interest rate of 14.90% is available, but you’ll have to pay an annual fee of $59 as well
- Very bare bones - users won’t earn any rewards or cash back and there’s no perks
Also consider:
featured
First year reward
based on spending $2,200/mo after $0 annual fee
- Earn rewards
0.5% – 1% earn rate
- Annual fee
$0
- Perks
- Details
Perks
- Making the most of your money withno monthly fees
- Earning 1% cash back on groceries and transportation
- 3% interest on your entire balance, from your Spendable to your savings
- Up to $100K of your money earning interest isprotected by CDIC
- Free e-Transfers, no matter how many you send
Ratehub’s take
The Koho Easy Mastercard is a prepaid credit card that is a great option for individuals with no or bad credit scores. The Koho Easy allows you to earn cash back rewards for every purchase and offers a credit building service helping you build or rebuild your credit history.
Pros
- No annual fee
- Simplified approval process: No credit check required
- Earn interest on your balance: As this card is a hybrid spending-save account, you can earn 3% interest on your entire balance
- Lower foreign exchange fee: Enjoy a lower foreign exchange fee of 1.5% compared to the 2.5% found on other cards
- Access to credit building tools: Improve your credit score with Koho Credit Buiding (note: this service is an additional $10 per month)
Cons
- Limited reward potential: Lacklustre rewards as the card only earns earns 1% cash back on two categories – groceries and transportation
- No included insurance: This card lacks any insurance coverage, including basics like extended warranty or purchase protection
Minimum credit score: 300 Minimum income: N/A Purchase interest: 0.00%Eligibility requirements
Interest rates
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.
The PC Financial’s Mastercard retail credit card might be within your reach if you have fair credit. 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.
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?
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
How to get a credit card with bad credit
One of the best ways to rebuild your credit is by getting a credit card. But when most credit cards require at least a good-to-great credit rating for approval, how do you get over that wall? Thankfully, there are options, and many of them ask much less of applicants. For most easy-approval credit cards, you'll only have to meet a few requirements:
- Be a permanent resident of Canada
- Be the age of majority in your home province
- Not carry an existing debt on a credit card with the same company
If you're interested in paying off existing credit card debt, a balance transfer credit card is the perfect solution. These cards come with lower-than-average promotional interest rates (sometimes even no interest at all) and allow you to transfer over your current balance to pay it off with them. If you've got a solid repayment plan in place, you can take care of your debt during the promotional window (usually six to 10 months) without the extra stress of additional interest creeping in. One caveat, however: most balance transfer cards don't apply their promotional interest rate to new purchases, only payments on an existing balance. That means that any purchases you make on the card are going to be subject to it's regular (read: higher) interest rate, so it's worth it to pay off what you owe first.
Another option is a secured credit card, which works just like a regular credit card with one exception: you'll need to make a deposit up front to activate it. This deposit is typically the same amount as your credit limit, and it's used as collateral for the bank in the event that you default on a payment. Because of this, secured cards are very easy to obtain as the risk on the provider's end is minimal. And while this may sound similar to a prepaid credit card, there is one big difference: unlike prepaids, secured credit cards report your payments to Canadian credit bureaus. This means you'll be building your credit score as you make purchases and pay them off responsibly.
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:
- The Best Credit Cards in Canada
- What is a Secured Credit Card (and How Do They Work?)
- How to pay off your credit card and reduce interest charges
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