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Best Credit Building Loans in Canada 2023: Repair Your Bad Credit

If you have a bad credit score or no credit, a credit building loan can help you build or repair your credit so you can qualify for loans and credit cards at competitive rates in the future.

Credit scores range from 300 to 900 in Canada. A credit score below 659 makes it challenging to qualify for credit. From 660, your chances for approval increase significantly.

A credit builder loan can be secured or unsecured, depending on your financial circumstances. A credit-building credit card could help you achieve the same goal.

Read on to learn about the best credit-building loans in Canada and how they work.

Best Credit Building Loans in Canada

You can get credit builder loans from online lenders, credit unions, and some banks.

1. Loans Canada

Loans Canada works with various lenders who offer loans with bad credit.

Using the online platform, you can easily submit an application and get matched with a lender that meets your needs.

The benefit of this platform includes access to unsecured credit builder loans, secured personal loans, debt consolidation loans, and various loan types for those with poor or bad credit.

Loans Canada

Loans Canada is a loan comparison platform for all kinds of personal loans, car loans, debt consolidation loans, and bad credit loans. This company holds an A+ accreditation with the Better Business Bureau and features multiple lenders on its website.

Interest rate: 1.99% to 46.96%

Loan term: 3-60 months.

Maximum loan amount: Up to $50,000.

Eligibility: Resident of Canada and employed for at least 3 months with proof of income.

loans canada logo

On Loans Canada’s website

  • Loan comparison platform that offers personal, debt consolidation, bad credit, guarantor, unemployed, no credit check, and no bank or employment verification loans.
  • Flexible terms and interest rates from 1.99% to 46.96% APR and 3-60 month term lengths.
  • Fill out one application and get access to hundreds of loan options without hurting your credit score.
  • Those with poor, average, or excellent credit scores can apply.
  • Compare multiple lenders for the best loan amounts, interest rates, and term lengths.
  • Complete your entire application online with no face-to-face interaction.
  • Apply in about 5 minutes with basic personal information and required documents.

Compare multiple lenders in one place

Fast and easy application process

Many different types of loans available

Interest rates can be as high as 46.96%

Some bad credit loans can incur early repayment penalties

Loan origination fee charged by some lenders

Loans Canada is one of the top loan comparison platforms in Canada that offers many types of personal loans from various lenders. You can easily compare and apply on their website, as well as view user reviews for each lender.

2. LoanConnect

Like Loans Canada, LoanConnect connects users with multiple lenders on one platform.

Pre-approvals occur within minutes, and you could receive funds in 1-2 business days.

Learn about how LoanConnect works in this detailed review.


LoanConnect is a search engine for finding personal loans online from various lenders. You can use it to find a loan that works for your situation regardless of your credit score.

Interest rate: 6.99% to 46.96%.

Loan term: 3-120 months.

Maximum loan amount: Up to $50,000.

Eligibility: Resident of Canada and the age of the majority in your province or territory.

loanconnect logo

On LoanConnect’s website

  • No matter their credit score, Canadians can apply for a loan and are likely to be approved for a secured or unsecured loan from many different lenders.
  • Unsecured personal loans and installment loans are offered.
  • Types of loans include debt consolidation, home improvement, emergency, business, and medical expense loans.
  • Easily apply by filling out one form with the loan amount, purpose, personal, and employment details.

Get loans up to $50,000

No minimum credit score required

Searches through multiple lenders to find the best providers

Loan options are limited to LoanConnect’s partners

No origination or brokerage fees

Interest rates can be as high as 46.96% APR

LoanConnect is one of our top choices as they search through different lenders to find the best loan options for you based on the loan amount, purpose, and employment information. The application process is straightforward so that you can get multiple loan offers in under a minute.

3. Refresh Financial

Refresh Financial offers a Credit Builder Loan with no credit check.

It is available in four different options with bi-weekly payments ranging from $21.37 to $121.94 and 36-month or 60-month terms.

The annual percentage rate (APR) of this credit builder loan is 19.99%.

Visit Refresh Financial or read our review.

4. Credit Unions

Some credit unions offer credit builder loans to their members.

The loan is put into a term deposit (registered or non-registered), and after you have paid the loan in full and the term investment matures, you can withdraw it.

Credit Building Loan Alternatives in Canada

A credit building program like the one offered by KOHO or a credit building credit card can help you build or repair credit.

KOHO Credit Building

This credit-building program involves signing up for a free KOHO account which comes with:

  • A free reloadable prepaid Mastercard
  • Up to 5% cash back at select merchants and 1% cash back on groceries and bill payments
  • Budgeting app and access to high-interest savings
  • $20 welcome bonus with CASHBACK referral code

You can add credit building to your KOHO account by paying a $7-$10 monthly subscription fee. This payment is reported to a credit bureau as a line of credit repayment, and it can improve your credit score if you make payments on time. You can also view your current credit score in the app.

Visit KOHO or read the credit building review.

Credit Building Credit Cards

Secured credit cards are easy to qualify for even if you have bad credit. The best secured credit card for credit building in Canada is the Neo Secured Card.

It offers guaranteed approval, and you only need a security deposit of at least $50.

Neo Secured Mastercard

Rewards: Earn up to 5% real cash back on purchases.

Welcome offer: 15% cashback on your first purchases, plus a $25 welcome bonus.

Interest rates: 19.99% – 26.99% for purchases.

Annual fee: $0

Credit limit: Starts at $50.

Credit score required: Poor or bad credit score.

What is a Credit Building Loan?

A credit-building loan helps you build and improve your credit score.

They are also known as credit repair loans, credit builder loans, or secured savings loans.

How Do Credit Building Loans Work?

A credit builder loan is like a regular personal loan, except it works in reverse.

Instead of getting a loan upfront and access to cash, a credit builder loan requires you to provide cash upfront through monthly scheduled payments for 6-24 months or longer.

Each of these payments is reported to a credit bureau and becomes part of your credit history.  If you make the payments on time, your credit score should improve.

Your payments are typically held in a savings account, and after the loan term ends, the cash is paid out to you.

Credit builder loans include a high-interest component or fee that is blended into your monthly payments.

Summary: A credit building loan requires you to first pay off the loan before you get access to funds.

How To Apply for a Credit Building Loan

The process for getting a credit-builder loan is similar to other types of personal loans.

  1. Start by finding a lender that offers credit builder loans.
  2. Check and compare their requirements, including age eligibility, minimum and maximum loan amounts, interest rates, loan terms, payment schedules, and more.
  3. Apply for the loan. In many cases, you can apply online and get a free quote. You will need to provide information about your finances, employment status, income, age, and address.
  4. Pay off the loan and build your credit in the process.

Pros of Credit Builder Loans

  • It can help you build credit
  • Good for developing healthy financial habits such as saving money and making payments on time
  • The money is yours when your loan is paid off
  • Available for any credit type, including bad credit

Downsides of Credit Builder Loans

  • Have high-interest fees
  • Late or missed payments can further hurt your credit score
  • Requires you to pay off a loan first

Should I Get a Credit Builder Loan?

A credit builder loan can help you improve your credit score if you have a limited credit history or a bad credit score.

If you have a good credit score, these types of loans are not suitable as you will likely qualify for a traditional personal loan or credit card.

It should be noted that credit builder loans are not quick fixes for a poor credit rating.

They may not be suitable if you have high-interest debt, as this should be paid off first. You must also be able to afford the monthly payment, or you could damage your credit score.


Top Loan Offer this month

Compare the best loans for good and bad credit in Canada

Get the best loan rates from lenders regardless of credit score.

Quick online application from the comfort of your home.

Borrow up to $50,000 for 3 months to 60 months.

Loans for any reason with rates from 2.99% to 46.96%.

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Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch is passionate about helping others win with their finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, CBC News, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, and many other personal finance publications. You can learn more about him on the About Page.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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