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If you have had problems with managing your finances in the past and this has resulted in a bad credit profile, there is hope that you can turn things around and improve your credit score when you start using credit wisely.

In this post, you will find a list of the best credit cards you can qualify for even if your credit is bad or less than stellar.

A credit score is a three-digit number ranging from 300 to 900 that lenders use to determine your creditworthiness in Canada. If your credit score is above 660, it qualifies as ‘good’ and you may qualify for credit easily. When your credit score falls below 660, it is seen as either ‘poor’ or ‘bad’ depending on where you fall, and getting approval for credit becomes much more difficult.

Here’s how you rank based on your credit score:

760 – 900 → Excellent
725 – 759 → Very Good
660 – 724 → Good
560 – 659 → Poor
300 – 559 → Bad

In some cases, borrowers may find it difficult to access credit facilities due to a lack of credit history and as a result of being newcomers to Canada. Whether you have bad credit or have no credit at all, the mix of secured, unsecured, low-interest rate and guaranteed approval credit cards give you the opportunity to establish your credit from scratch or to repair your existing bad credit rating.

Credit Card Options for Bad Credit in Canada

Some of the credit card options that may be useful to you if you have bad credit include:

  • Secured credit cards
  • Unsecured credit cards
  • Guaranteed credit cards
  • Low-interest rate credit cards
  • Prepaid credit cards

One important thing to note here is the difference between secured and unsecured credit cards. 

Secured credit cards require you to put down a security deposit that either matches your credit limit or is a percentage thereof. Secured credit cards are easier to qualify for since the credit issuer now has collateral from you that significantly diminishes their risk.

An unsecured credit card works like a ‘regular’ credit card and no collateral or security deposit is required. Both secured and unsecured credit cards report to the credit bureaus, so you can use them to rebuild your credit. Also, a secured credit card may offer perks and rewards similar to regular cards.

Guaranteed credit cards often refer to a form of secured credit card that requires you to to make a deposit (full or partial) and guarantee that you will very likely be approved even if your credit history is bad to poor. In some cases, they offer instant approval.

Low-interest rate cards can be secured or unsecured. They may charge a lower interest rate on cash advances and your credit balance in general. While having a lower rate is great, your aim should be to pay off your balance every month so you can build up your credit score fast.

Prepaid cards offer the convenience of a Visa or Mastercard and are convenient for shopping online or in-store. However, the issuing financial institutions do not generally send reports to the credit bureaus, so their cards are not useful for improving your credit rating.

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Best Secured Credit Cards for Bad Credit

If you have a low credit score and are unlikely to be approved for an unsecured credit card, you should check out these two options.

1. Home Trust Secured Visa Card (No Fee)

    • Annual fee: $0
    • Credit score requirement: bad to poor; 95% approval rate
  • Credit limit: $500 to $10,000
  • Minimum income eligibility: $0

The Home Trust No Fee Secured Visa card is a secured card that works great for rebuilding your credit. Virtually all applications are approved and you will need to put down a security deposit which determines your credit limit. The card charges a 19.99% interest rate on purchases and cash advances. 

You are expected to make payments to this card like any other credit card. When you close your account, your security deposit is returned.

Apply for the Home Trust No-Fee Secured Visa card.

Home Trust Secured Visa

2. Refresh Financial Secured Visa Card

  • Annual fee: $48.95
  • Credit score requirement: bad to poor
  • Credit limit: $200 to $10,000
  • Minimum income eligibility: $0

The Refresh Financial Secured Visa card does not require a credit check. The basic requirement for approval is that you can make a deposit of at least $200. If you have exhausted your options in looking for a credit card, this card is guaranteed to be approved.

The Refresh card comes with a 17.99% annual interest rate on your revolving purchase balances. It also comes with free access to Refresh F.I.T, a financial education program that can help you turn your finances around.

Apply for the Refresh Financial Secured Visa.

Refresh Financial Secured Visa Card

Best Low-Rate Secured and Unsecured Credit Cards for Bad Credit

Have bad credit and prefer a low-interest rate credit card? There are options. If your credit is fair to good, you may be able to obtain an unsecured credit card and not have to make a security deposit.

1. Home Trust Secured Visa (Low Rate)

  • Annual fee: $59
  • Credit score requirement: bad to poor
  • Credit limit: $500 to $10,000
  • Minimum income eligibility: $0

The Home Trust Secured Visa card (low-rate option) offers a low-interest rate of 14.90% on purchases. With this low-rate comes a $59 annual fee or $5 per month. This card makes sense if you will be carrying a balance from month to month after making the minimum payments. You save a bit of money compared to the typical 19.99% charged by secured cards.

Since this card is secured, you will need to make a security deposit that reflects your credit limit. If you have had difficulties getting approved for a credit card due to a previous bankruptcy that is now discharged, you should check out the Home Trust Secured Visa.

Apply for the Home Trust Low-Rate Secured Visa.

Home Trust Secured Visa

2. No-Fee Scotiabank Value Visa Card

  • Annual fee: $0
  • Credit score requirement: Fair. No credit history needed if you are new to Canada
  • Credit limit: $500 minimum

The No-Fee Scotiabank Value Visa card is an unsecured card that has no annual fees. If you are looking to transfer your existing credit balance so you can pay a lower interest rate, this card offers a 3.99% promotional rate on balance transfers for the first 6 months and 16.99% AIR after the introductory offer ends.

An additional benefit offered by this card is a 25% discount on car rentals at participating AVIS and Budget locations.

Apply for the No-Fee Scotiabank Value Visa card.

No-Fee Scotiabank Value Visa Card

3. BMO Preferred Rate Mastercard

  • Annual fee: $20
  • Credit score requirement: fair to good
  • Minimum income eligibility: $15,000

The BMO Preferred Rate Mastercard offers one of the lowest interest rates on purchases available in Canada at 12.99% and an introductory rate of 3.99% on balance transfers for your first 9 months!

Other perks included with this card are the free extended warranty and purchase protection. A one-time 1% transfer fee is applied to balance transfers.

Apply for the BMO Preferred Rate Mastercard.

BMO Preferred Rate Mastercard

4. RBC Visa Classic Low Rate Card

  • Annual fee: $20
  • Credit score requirement: fair to good
  • Minimum income eligibility: $15,000

If your credit score is in the fair-to-good category, you may qualify for the RBC Visa Classic low rate option card. This unsecured card comes with a low 11.99% rate on cash advances and purchases, and you are not required to put down a deposit. 

The annual fee of $20 is minimal and is easily paid off by the savings on the low-interest rate if you carry a balance on your card.

Other perks offered by this card are:

  • Purchase security and extended warranty insurance
  • Save 3 cents per litre when you buy gas at Petro Canada

Best Prepaid Credit Cards for Bad Credit

Prepaid credit cards may come in handy if all you need is a card that you can easily use to make payments online and everywhere else. Typically, the card issuers do not check your credit score and they also do not report to the credit rating agencies. So, these cards will not help you build your credit score.

You are only able to spend money you load onto a prepaid card, so they can technically be referred to as reloadable debit cards.

1. KOHO Prepaid Visa Card

  • Annual fee: $0
  • Credit score requirement: none
  • Minimum income eligibility: $0

The KOHO Visa Card is considered as one of the best prepaid credit cards in Canada. The card has no annual fees and comes with a versatile app that helps you with budgeting, automatic savings, and real-time insights into your spending.

Here’s what you get with the KOHO Visa card:

  • $0 annual fees
  • 0.50% to 2% cash back on purchases
  • Get 1% in bonus sign-up cash back for 90 days
  • An automatic savings plan that rounds up your purchases and saves the difference
  • Free financial coaching
  • Earn extra cash back for every referral…up to 12%
  • Joint accounts
  • An optional premium account that offers even more rewards

Apply for the KOHO Visa Card here (use promo code CASHBACK to get a bonus 1% cashback free!)

KOHO Premium App and Card

2. STACK Prepaid Mastercard

  • Annual fee: $0
  • Credit score requirement: none
  • Minimum income eligibility: $0

The STACK Mastercard is very similar to KOHO in how it functions. It is reloadable and can be used to make payments anywhere in the world. It also comes with an app (available on iPhone and Android) that makes it easy to budget and track your spending.

Here are the benefits you get with the STACK Mastercard:

  • $0 monthly or annual fees
  • $0 foreign exchange fees when you use the card abroad
  • $5 sign up bonus
  • Cash back offers on everyday purchases
  • No ATM withdrawal fees
  • Automated savings using roundups
  • Free STACK-to-STACK transfers
  • Mastercard Zero Liability Protection

Apply for the STACK Mastercard (this mobile phone link includes a $5 sign up bonus).

Best Guaranteed Secured and Unsecured Credit Cards for Bad Credit

A guaranteed credit card means that you are very likely to be approved even if you have bad credit. The issuer reports your usage to the credit bureaus so you can use these cards to rebuild your credit score.

One popular guaranteed credit card is the Refresh Financial Secured Visa. Capital One also has a selection of three guaranteed cards that may suit your needs.

1. Capital One Low Rate Guaranteed Mastercard

  • Annual fee: $79
  • Credit score requirement: bad to poor
  • Credit limit: $300 to $7,000

The Capital One Low Rate Guaranteed Mastercard offers a guaranteed approval which when combined with its lower 14.90% AIR on purchases and balance transfers makes it a good deal if your credit is bad. The interest rate for cash advances is 19.80%.

To qualify, you must meet the following conditions and:

  • Be at least the age of the majority in your province or territory of residence
  • Not have applied for a Capital One account more than once in the last month
  • Not have an existing Capital One account or a pending application for one
  • Not have a Capital One account that was in bad standing in the last year.

Other benefits of this card include:

  • Free price protection, purchase assurance and extended warranty
  • Travel accident insurance
  • Car rental collision/loss damage waiver
  • Baggage delay insurance and travel assistance
  • Mastercard’s Zero Liability Protection

Apply for the Capital One Low Rate Guaranteed Mastercard.

Capital One Low Rate Guaranteed Mastercard

If your application for the unsecured low rate guaranteed card is not approved, Capital One may approve you for the unsecured version.

2. Capital One Guaranteed Secured Mastercard

  • Annual fee: $59
  • Credit score requirement: bad to poor
  • Credit limit: $300 to $2,500
  • Security funds: $75 to $300

The Capital One Guaranteed Secured Mastercard requires that you deposit security funds of $75 to $300 before you can be approved and it comes with a $59 annual fee.

It is a great card for establishing or repairing your credit score since Capital One reports your credit payments and history to the credit bureaus on a monthly basis. This card comes with a 19.8% interest rate on purchases, balance transfers and cash advances.

Apply for the Capital One Guaranteed Secured Mastercard.

How To Rebuild Your Credit Score in Canada

Having a good credit score and profile is important. Financial institutions and service providers often refer to it before approving you for credit or service. While you can opt to pay cash whenever possible, the easiest way to work your way back into the good books of these providers is to start being smart with how you use credit. 

Here are some of the best tips for improving your credit score:

1. Pay your bills on time, all of the time. Your repayment history makes up about 35% of your credit score calculation.

2. Use no more than 30% of your credit limit. For example, if your credit limit is $1,000, keep your outstanding balance at $300 or less.

3. Keep your oldest credit cards since the length of your credit history matters (15% weighting), especially if you have been using the card responsibly.

4. Avoid making too many credit applications. Hard inquiries by lenders may impact your score negatively.

5. Request your free credit report and review it for errors. If you find inaccuracies, contact the credit bureaus (Equifax or TransUnion) and ask them to correct or delete them.

6. Mix up your credit types and use them wisely to give your credit score a boost.

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