Our Disclosure

The content on this website includes links to our partners and we may receive compensation when you sign up, at no cost to you. This may impact which products or services we write about and where and how they appear on the site. It does not affect the objectivity of our evaluations or reviews. Read our disclosure.

How to Get a Credit Card with Bad Credit in Canada

Updated:

Fact Checked

Having a poor credit score can be frustrating when you want to apply for a credit card. Most credit cards will check your score before they accept your application. They may determine that you pose too much risk if you have a low score.

Even worse, the fact that they carry out a hard credit check can hurt your score.

But what exactly is a bad credit score? How can you improve it? And what are the best credit cards to apply for if you have a bad score?

We cover everything you need to know in this guide.

What a Bad Credit Score Means

Your credit score consists of a number between 300 and 900. 300 is the lowest, and 900 is the highest. Creditors will usually check this score to see how risky you are.

But what is considered a “bad” score?

In general, creditors look for a score of about 660 or above. This is considered a “good” score, so anything below this could be considered a “bad” score.

However, just below 660 would normally be considered a “poor” score rather than “bad.” Usually, below 560 would be considered a “bad” credit score.

Another issue is that you may have no credit score if you have never had access to credit of any kind. This lack of credit history can also lead to you being turned down for a credit card.

Tips for Getting a Credit Card with Bad Credit

A bad credit score does not prevent you from getting a credit card. As you can see from the cards listed below, options are still available even if you have bad credit.

Start by researching suitable credit cards explicitly marketed towards people with bad credit. Then, go over all the application requirements (income, residential status, etc.) and decide whether you meet the criteria. If so, apply for the credit card online.

If you are looking for instant approval credit cards for bad credit in Canada, several cards have very high approval rates. This can give you more confidence when making an application.

Alternatively, use a prepaid card, preferably one that helps you to build your credit score as you use it.

Or you may want to apply for a card like Koho and join the credit builder program. While a cost is involved, it is easy to build your credit score. When your score is higher, you may find you have more options when it comes to applying for a credit card.

You could also focus on building your credit score another way, like paying back bills on time and reducing your credit utilization.

One thing to avoid is applying for several cards one after another because this can hurt your credit score. Instead, it’s better to research your options carefully and apply for a card where you know you have a good chance of being accepted.

What to Look for in a Bad Credit Score Credit Card

Bad credit score credit cards are available and may be an option for you, whether secured credit cards or prepaid cards with a credit builder feature.

But what should you look for?

  • Interest Rates – Credit card interest rates can be high. Compare the APR for standard purchases and cash advances when choosing your card.
  • Fees – Many cards come with additional fees like an annual fee or fees for premium features. Make sure you include these when working out the cost of the card.
  • Rewards – While rewards are not as common when using cards for bad credit, cashback may be available on some that can help you to save money on your spending.
  • Additional Features – Some cards come with apps with useful features like tracking your spending or saving money.
  • Requirements – Make sure you check whether there are any minimum income requirements or additional requirements before you apply.
  • Credit Checks – Find out whether the card provider will check your credit score when you apply. You may prefer to choose a no-credit-check credit card.

Best Credit Cards for Poor Credit

If you have a poor credit score and want to find a suitable credit card, here are some you might want to consider.

Neo Secured Credit Card

Neo Secured Credit

Rewards: Get an average of 5% cash back at 10,000+ locations.

Welcome offer: Up to 15% welcome bonus cash back on your first-time purchases; $25 cash bonus.

Interest rates: 19.99% – 29.99% for purchases; 22.99% – 31.99% for cash advances.

Annual fee: $0

Neo Secured Credit Card is one of the most popular options in Canada for people with bad credit. It has no annual fee or minimum income requirement, and no credit check is made when you apply.

If you are looking for guaranteed approval credit cards for bad credit, Neo could be an option because it claims to provide guaranteed approval. However, this depends on you meeting the requirements.

It has a purchase APR between 19.99% and 24.99%. There is a $50 minimum deposit, which is not too much, and you can increase your limit or decrease it when you need to.

Neo offers a 5% average cash back and a welcome bonus of up to 15% cashback. Other perks include insurance and unlimited cashback rewards (at partner stores). It doesn’t come with annual fees or over-limit fees.

You can also access the insights dashboard to see what you are spending money on. And there is an auto-pay feature, so you don’t miss any payments.

Tangerine Money-Back Credit Card

Tangerine Money-Back Credit Card

Rewards: Earn up to 2% unlimited cash back in up to 3 spending categories and 0.50% on all other purchases.

Welcome offer: Get an extra 10% cash back on up to $1,000 in spending in the first 2 months ($100 value); 1.95% balance transfer rate for 6 months.

Interest rates: 19.95% for purchases, balance transfers, and cash advances.

Annual fee: $0

This unsecured credit card is available for people without a good credit score. However, getting your application accepted may be more difficult because it is unsecured.

It has a $0 annual fee and a minimum income requirement of $12,000. The APR is 19.95% for purchases and cash advances.

Tangerine offers up to 2% cash back on spending and 15% extra cashback for the first two months. You can choose three categories from a list of 10 to get 2% cashback; otherwise, the rate is 0.5%.

It also offers 1.95% on balance transfers for new cardholders for the first six months, plus extended warranty coverage. You can also track your spending in the app.

Home Trust Secured Visa

Home Trust Secured Visa

Rewards: Earn points you can redeem for cash.

Interest rates: 14.90% on purchases; 19.80% on cash advances.

Annual fee: $59.

Credit limit: $500 to $10,000.

Credit score required: Poor or bad credit score.

This secured credit card is targeted at people without great credit scores. There is no annual fee or minimum income requirement, but you cannot be in bankruptcy to apply and must have an income source.

Purchases and cash advances have an interest rate of 19.99%, and you must make payments just like a regular card. There is also the option of a card with a $59 annual fee and a lower interest rate of 14.90%.

You put down a security deposit, and this determines your credit limit. The minimum deposit is $500, and you get your security deposit back when you close your account.

Home Trust also reports your payments to both credit bureaus, helping you build your credit score.

KOHO Prepaid Mastercard

KOHO Prepaid Mastercard

Rewards: Earn 1% cash back on groceries and transportation, up to 5% unlimited cash back at partner stores in Canada. Get 3% interest on your entire balance. Users also get access to a free budgeting app.

Welcome offer: $20 sign up bonus after first purchase (use CASHBACK promo code during sign-up)

Interest rate fee: N/A

Annual fee: $0 (no monthly fees)

While getting a credit card for bad credit with no security deposit can be tricky, you might want to get a prepaid card instead. KOHO offers a prepaid card with no annual fee, income, or credit score requirements.

The no-fee KOHO account also provides unlimited instant cash back and up to 1% extra cash back for shopping at its partners. It also has a useful app that provides spending insights and a savings plan.

While not a credit card, it does have an optional credit-building feature for $10 per month. With this, you make your monthly payments, and KOHO reports these to a credit bureau, and you can see your credit score as it is updated.

On average, KOHO Credit Building subscribers increase their score by 20 points within 6 months.

KOHO also offers a Premium account that comes with a financial coaching service to help you regain financial balance. It also offers 2% cash back on essential categories like groceries and transport. This costs $9/month or $84/year.

How to Improve Your Credit Score When You Have Bad Credit

The first thing to do is find out what your credit score is. You can do this at Equifax or TransUnion. If you find that you have a bad credit score, you will want to improve it.

You can do various things to improve your credit score if you have bad credit.

1. Reduce Credit Utilization

If you have other credit cards or loans, pay back as much of your balances as possible so you only use 30% or less of your total credit limit.

This is called utilization; a lower utilization is better for your score.

2. Always Pay on Time

As well as paying back your loans on time, always pay your bills on time, including your cell phone bill.

3. Avoid Applying for Lots of Credit

Avoid applying for several credit cards or loans in a short period. This can harm your score.

4. Use a Secured Credit Card

With a bad credit score, you are less likely to be successful in applying for unsecured credit cards. But you may be able to apply for a secured credit card.

Finding credit cards for bad credit with no deposit required can be difficult. But with a secured card, you have to provide collateral, usually a deposit. Then, if you fail to make your payments, the lender can use your deposit, so there is less risk for them.

As such, secured credit cards are often an option for people with bad credit. You can improve your credit score by using a secured card and making monthly payments on time.

5. Join a Credit Building Program

Some credit cards for poor credit, like that from KOHO (see below), also have optional credit-building programs.

With these, your payments are reported to the credit bureaus every month. So you can build your credit score if you make your payments regularly.

Credit Cards for Bad Credit: FAQs

Is it true that after seven years, your credit is clear?

If you have negative information on your credit report, this will typically stay for six years. But that is not a set rule, and it could stay longer or shorter.

What banks will give you a credit card with bad credit?

There are many options for secured credit cards and prepaid cars. Check the cards in this guide for a starting point. Finding an unsecured credit card for bad credit in Canada is less common, but there are options depending on your credit score, like the Tangerine Money-Back Credit Card.

Can I pay someone to fix my credit?

There are various things you can do if you want to improve your credit score, like joining a credit builder program. Some of these require a fee, like the one offered by KOHO. But you cannot exactly pay to fix your score because you will have to take specific actions like making monthly payments on time.

Which bank gives credit cards easily?

This always depends on the borrower’s situation, including their credit score and other factors. If you meet the requirements and have a good credit score, you may find that many banks are relatively easy to get approved. But if you have a bad credit score, a secure credit card or prepaid card like those mentioned in this guide may be better.

Best Credit Offers in March 2024

Get the top savings and spending account and stop paying costly bank fees ($20 Bonus)

Save on fees and access unlimited transactions, eTransfers & bill payments.

Get a $20 instant bonus after completing your first purchase.

Earn up to 5% unlimited cash back and up to 5% interest on your balance.

Guaranteed instant approval with any credit score + free budgeting app.

Get this guaranteed approval credit card for any credit score ($25 bonus)

Get an instant $25 welcome bonus.

Earn 5% unlimited average cash back at thousands of locations.

Guaranteed approval for poor and bad credit scores. Takes 3 minutes.

No monthly fees and up to 15% cashback on your first-time purchases.

Earn an average 5% cashback while growing your balance + $20 bonus

Best free prepaid reloadable Mastercard with $20 bonus (after adding $50+).

Earn an average 5% unlimited cash back at over 12,000 stores.

No credit check and free budgeting app with automatic savings features.

Earn 2.25% interest on your entire balance.*

Author

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

Enoch Omololu, personal finance expert, author, and founder of Savvy New Canadians, has written about money matters for over 10 years. Enoch has an MSc (Econ) degree in Finance and Investment Management from the University of Aberdeen Business School and has completed the Canadian Securities Course. His expertise has been highlighted in major publications like Forbes, Globe and Mail, Business Insider, CBC News, Toronto Star, Financial Post, CTV News, TD Direct Investing, Canadian Securities Exchange, and many others. Enoch is passionate about helping others win with their finances and recently created a practical investing course for beginners. You can read his full author bio.

About Savvy New Canadians

Savvy New Canadians is one of Canada's top personal finance platforms. Millions of Canadians use our site each year to learn how to save for retirement, invest smartly, maximize rewards, and earn extra cash. We have been featured in prominent finance media, including Forbes, Globe and Mail, Business Insider, CBC, MSN, Wealthsimple, and TD Direct Investing. Learn more about Savvy New Canadians.

Free financial education

Expert advice

Free resources

Detailed guides

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.