10 Best Credit Cards to Rebuild Credit in Canada (2022)

If you have a poor or bad credit score, a secured or unsecured credit card designed for rebuilding credit can help turn your finances around.

While you generally don’t need a great credit score to apply for a prepaid card you can use for everyday shopping online, credit card issuers are a lot stricter.

Lenders look at your credit history and usually won’t approve your credit card application if your credit score is below 660.

That said, there are financial institutions in Canada that offer secured, unsecured, low-interest-rate cards, and even guaranteed approval credit cards to people with bad credit.

This article covers the best credit cards for rebuilding credit or establishing credit in Canada.

Secured and Unsecured Credit Cards for Bad Credit

A secured credit card requires that you make a security deposit before you can access credit.

The security deposit acts as collateral and is equivalent to your credit limit. This lowers the risk of default faced by a lender if you are unable to pay off your balance.

When you no longer need the card, you can close your account and get your deposit back.

An unsecured credit card does not require a security deposit; however, you must meet minimum requirements including a good credit score.

Both secured and unsecured credit cards report your activity to the credit bureaus. This can help build or rebuild your credit if you use the card responsibly.

Best Credit Cards to Rebuild Credit

There is a high degree of probability that you will be approved for some of the cards on this list.

The KOHO Prepaid Mastercard is not your typical credit card (it is a prepaid card) and you can qualify for it with any type of credit rating (including a bad credit score).

It offers a Credit Building Program for those who are looking to increase their credit score quickly.

After getting the free KOHO Card, simply subscribe to Credit Building at $7 per month. They report your monthly subscription fee payments to the credit bureaus, and this helps to rebuild your score over time.

You can unsubscribe from this optional service at any time.

The free Card also comes with free perks and rewards including:

• 0.50% cash back on all debit purchases
• Free access to $100 from your paycheque 3 days early
• 1.20% savings interest paid on your account balance (one of the best savings rates in Canada)
• Free budgeting app
• $20 cash bonus when you activate your card and use it for at least one purchase within 30 days of getting it

The Neo Secured Mastercard is the best credit card for bad credit in Canada.

Unlike traditional secured credit cards that charge a fee and don’t pay rewards, the Neo Secured Card offers up to 5% cash back when you spend with the card.

Approval is guaranteed and when you sign up using our referral link, you also get a $25 cash bonus, plus 15% cash back when you make your first purchase at several participating retailers.

You can easily redeem your cash back to pay off your credit card balance.

There’s no cap on your credit limit with this card and it is equivalent to your security funds. Learn more in this Neo Secured Card review.

The Plastk Secured Visa* Credit Card is one of the top secured cards for those with bad credit.

You can apply for a credit limit of up to $10,000 and can easily make payments to settle your balance using Interac e-Transfer.

Unlike traditional secured cards that offer no rewards, the Plastk Secured Credit Card offers the following perks:

• 0% APR for the first 3 months
• 6,250 bonus points ($25 value)
• Rewards points when you pay with your card
• 25 days interest-free grace period for purchases and 3 days for cash advances

You can redeem your rewards points as a statement balance or redeem them for merchandise, gift cards, travel, charitable donations, and more.

This card has a $48 annual fee. After adding the $6 monthly maintenance fee, it costs $120/year.

Read my Plastk Secured Credit Card review for more details.

The no-fee Home Trust Secured Visa can help you rebuild credit.

Cardholders can choose what their credit limit is based on how much they provide as a security deposit, with a minimum amount of $500 and a maximum of $10,000.

Note that if you carry a balance beyond the grace period, a 19.99% purchase rate applies.

Read my Home Trust Secured Visa review.

The Refresh Financial Secured Card has a total fee of $48.95 per year.

Depending on your security deposit, you can get a credit limit of up to $10,000 and easily qualify for the card without a credit check.

Refresh Financial also offers a secured personal loan for those with bad credit.

Learn more in this Refresh Financial Secured Card review.

This guaranteed approval card can help you rebuild credit or establish one.

To qualify, you must:

• Be at least the age of the majority in your province
• Not have applied for a Capital One credit card more than once in the last 30 days or have had a Capital One account that was not in good standing in the last year
• Not have an existing Capital One account or a pending application for one
• Provide a security deposit ($75 or $300)

Read this review of Capital One credit cards.

The low-interest-rate version of the Home Trust Secured Visa Card has a $59 annual fee that is counterbalanced by a 14.90% purchase APR.

You can apply for a credit limit of up to $10,000.

Cardholders enjoy purchase security which protects eligible items against theft or damage for up to 90 days following purchase.

Best Unsecured Credit Cards To Rebuild Credit

If you have a good credit score i.e. a credit score above 660, you may qualify for an unsecured credit card that has a low interest rate.

The benefit of a low-interest credit card is that you can transfer your credit card debt at a lower rate and save on interest fees.

The Tangerine Money-Back Credit Card is an unsecured credit card that pays up to 2% cash back.

You can apply for this card if you have a credit score of 600 or higher and an annual income of at least $12,000.

For a limited time, new applicants can earn an extra $100 cash back when they spend up to $1,000 within the first 2 months of getting the card.

If you carry a balance from month to month, the Scotiabank Value Visa’s low interest rate can help you save on fees. It also offers a 0.00% promotional balance transfer rate in the first 6 months.

The minimum credit limit for this credit card is $500 and supplementary cards are free.

Cardholders can save up to 25% on car rentals at participating AVIS and Budget locations.

This card requires a good credit score, however, if you are trying to pay off your credit card debt, it can help you save on interest.

You pay a $29 annual fee (free supplementary cards) and a low 12.99% interest rate (compared to 20% or more).

Cardholders can save 3 cents per litre of gas purchased at Petro-Canada while also earning more Petro-Points.

How To Improve a Bad Credit Score

Your credit score is a three-digit number ranging from 300-900. It tells lenders how creditworthy you are and is a summary of the information on your credit report.

Here’s how credit scores are ranked in Canada:

• 300 – 559: Bad credit score
• 560 – 659: Poor credit score
• 660 – 724: Good credit score
• 725 – 759: Very good credit score
• 760 – 900: Excellent credit score

It is difficult to get approval for credit when you have a poor or bad credit score. When you do get credit, the interest rates are significantly higher and/or you may need to provide collateral (security deposit).

In order to improve your credit score, you must understand how your credit score is calculated.

The main factors impacting your score are:

• Your payment history
• Your credit utilization i.e. what you owe compared to your credit limit
• Length of your credit history
• Recent hard inquiries on your credit profile
• Type of credit you have

Your payment history has the most impact on your credit score and makes up about 35% of the calculation.

To increase your score, you should make payments on time. If you have delinquent accounts or those that have gone to collections, it lowers your credit score.

Aim to keep your credit utilization below 35%. For example, if your credit limit is $1,000, your outstanding balance should not exceed $350 on average.

The longer you have had a credit facility (e.g. credit card or line of credit), the bigger the influence they have on your score.

When lenders pull your credit records in order to assess a new credit application, it may impact your credit score.

You can check your credit score for free.