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Erica CorbinMany or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.
A bad credit score doesn’t mean you can’t get a credit card, though you may have fewer cards to choose from. That said, there are plenty of credit cards specifically designed for those with low or no credit history.
Whether you want to establish your credit history as a Canadian newcomer, repair a damaged credit score or simply need access to a card that fits your financial situation, a credit card geared towards those with no or bad credit may be the solution.
American Express Cobalt® Card
Welcome Offer: Earn up to 15,000 points (up to $150)! In your first year, as a new Cobalt Cardmember, you can earn 1,250 Membership Rewards® points for each monthly billing period in which you spend $750.
Earn 5X points on eligible Eats & Drinks. Earn 3X points on eligible streaming subscriptions. Earn 2X points on Travel and Transit. Terms and Conditions Apply.
Best overall credit cards for bad credit
Best secured credit card for: Cash back
Neo Secured Credit
Pros
- A small $50 minimum deposit makes this card accessible to consumers of all budgets.
- Earn up to 15% cash back on purchases with select Neo partners.
Cons
- Interest rates could be as high as 29.99% for some users.
- Build credit history with on-time payments.
- Set your credit limit and get started with as little as $50.
- Guaranteed approval with no credit score needed to apply.
- Earn 1% cashback on all gas and grocery purchases.
- 0.5% guaranteed monthly minimum cashback.
- No monthly or annual fees.
- Upgrade to Premium and earn exclusive benefits and boosted rewards, like 3% cashback on all gas and grocery and free credit monitoring.
- Personalized Insights AI generates tailored information and recommendations designed specifically for you.
Best prepaid card for: Building credit
KOHO Prepaid Mastercard (Essential Plan)
With Cashback on eligible purchases, the ability to earn interest on your balance and discounted rates for credit building add-ons, this is not your typically prepaid card.
Pros
- Low annual fee of $48 ($4 per month).
- Ability to earn 5% interest on your balance.
- Ability to earn between 1% and 5% cashback on eligible purchases.
Cons
- Credit-building option is not included for free.
- No insurance coverage.
- Earn 1% cash back on groceries, eating & drinking, and transportation. Plus, up to 50% extra cashback from select merchants.
- Earn 5% interest on both your spending and savings account. Your funds will also be eligible for CDIC insurance. Interest rates are per year, calculated daily, paid monthly, and can change at any time without notice.
- Choose from one of four exciting card colours. Receive both a physical and virtual card.
- Start adding funds and shopping online while you wait for your physical card to arrive in the mail. No need to budge from your couch to make online purchases. Just use your virtual card!
- Card Security – KOHO provides a different card number to help protect your physical card number when you’re shopping or booking services online
- Add your KOHO card to Apple, Samsung or Google Pay
- Automate your savings with Goals and RoundUps. Rounding up every purchase lets you stash away some savings, while Goals make it easier to save for whatever it is that makes you happy
- Lock in savings with Vault that keeps the funds you don’t want to spend separate from your spendable balance
- Create custom budgets and track your spending habits. Know where you’re at in real time with instant notifications every time you spend.
Best no-fee secured card for: Building credit
Home Trust Secured Visa (No annual fee)
The Home Trust Secured Visa offers a straightforward, no-frills experience for credit builders. Plus, there are two secured credit card options to fit a variety of needs: a no-fee card, and a low-interest card with a $59 annual fee.
Pros
- No annual fee.
- Payments are reported to both credit bureaus.
Cons
- You’ll need to budget for the $500 minimum deposit.
- No ability to earn rewards on purchases.
- No annual fee.
- Lower interest rate available for a $59 annual fee.
- $500 minimum security fund deposit required.
- $10,000 maximum security fund deposit.
- Hard credit checks are made on Home Trust Secured Visa applications.
- Credit activity, including every payment, is reported to TransUnion and Equifax, the two major consumer credit bureaus in Canada.
- Ability to upgrade to an unsecured credit card.
- Manage your account and billing online.
- Cardholders can choose between a card with no annual fee and 19.99% interest or an annual fee of $59 and 14.90% interest.
- Protection against fraud through Visa’s Zero Liability Policy.
- Preferred rates: 19.99% for purchases and cash advances.
- To be eligible, you must have a source of income and cannot currently be in bankruptcy. You must also be a Canadian resident of the age of majority in the province or territory where you live. The Home Trust Secured Visa Card is not available to Québec residents.
Best credit cards for fair credit
Best fair credit card for: Hotel stays
Marriott Bonvoy® American Express®* Card
The Marriott Bonvoy® American Express®* Card helps travellers earn free stays and experiences at some of the world’s ritziest hotels, restaurants and spas, while also providing helpful insurance options and flexibility in how Marriott Bonvoy® points can be used.
Pros
- Solid earn rates should help members of the Marriott Bonvoy® program score free hotel stays.
- Marriott Bonvoy® points can be transferred to frequent flyer miles with some airlines, including Air Canada’s Aeroplan.
- Access to American Express® Experiences and several varieties of insurance.
Cons
- You’ll need to be a Marriott Bonvoy® member to take advantage of the card’s most valuable benefits.
- American Express isn’t always as widely accepted as some other credit cards, so using the Marriott Bonvoy® American Express®* — and collecting points — everywhere you go might not always be possible.
- Travel to new heights with the Marriott Bonvoy® American Express®* Card.
- Earn up to 80,000 Points:
- New Marriott Bonvoy® American Express®* Cardmembers, earn 65,000 Welcome Bonus points after you spend $3,000 on your Card in your first 3 months of Cardmembership.
- Plus, earn an additional 3 points for a total of 5 points on every $1 spent on eligible travel and gas purchases in your first 6 months (up to 15,000 points).
- Offer ends May 6, 2024.
- Earn 5 points for every dollar in eligible Card purchases at hotels participating in Marriott Bonvoy®.
- Earn 2 points for every $1 in all other Card purchases.
- Receive an Annual Free Night Award for up to 35,000 points at eligible hotels and resorts worldwide every year after your first anniversary.
- No annual fee on Additional Cards.
- Redeem points for free nights with no blackout dates at over 7,000 of the world’s most desired hotels.
- Automatic Marriott Bonvoy Silver Elite status membership.
- Receive 15 Elite Night Credits each calendar year with your Marriott Bonvoy® American Express®* Card. These can be used towards attaining the next level of Elite status in the Marriott Bonvoy program.
- Enjoy an automatic upgrade to Marriott Bonvoy Gold Elite status when you reach $30,000 in purchases on the Card each year or when you combine 10 qualifying paid nights within one calendar year with the 15 Elite Night Credits from your card.
- American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the Apply Now link. Conditions Apply. If you apply and get approved for an American Express Card, NerdWallet may receive compensation from American Express, which can be in the form of monetary payment.
Best fair credit card for: No annual fee
Neo Credit
Pros
- High average cashback rate of 5%.
- No annual fee.
- 15% cashback on first-time purchases.
Cons
- Perks can be added, but for a fee.
- Purchase interest rate can reach as high as 29.99%, and cash advance rate can reach 31.99%.
- No annual fees.
- Earn instant unlimited cashback at thousands of partners that you can save for later or use immediately.
- Access exclusive welcome bonuses, like up to 15% cashback on first-time purchases.
- Earn an average of 5% cashback at 10,000+ partners across the country.
- Pay with Neo Credit to earn cashback. Then split the bill in the app to send multiple Interac e-Transfer® requests instantly. The payments will be directly deposited into your Neo Money™ account.
- Cash out the cashback you’ve earned with Neo Credit to a Neo Money™ account to take advantage of one of the highest everyday interest rates.
- Customers can get up to 4% cashback on all purchases at Shell gas stations and convenience locations when they use their Neo Credit, Neo Secured Credit or Neo Money™ card. Earn 2% cashback at the pump or convenience store locations. Earn 4% cashback on transactions made through the Shell App. Offer available in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Boost these offers by 50% when you add Everyday Essentials perks to your card.
Honourable mention for: Fair credit
Home Trust No Fee Preferred Visa Rewards Credit Card
This no-fee unsecured credit card is suitable to build or rebuild credit and offers cash back rewards on every purchase.
Pros
- No foreign exchange fees on foreign currency purchases.
- Suitable to build or rebuild credit.
Cons
- Cash back rewards are only redeemable as a statement credit.
- Receive 1% cash back¹ on every eligible purchase made with your Home Trust Preferred Visa*.
- CashBack Rewards earned are displayed every month on your statement, and the total amount earned for the previous year will be provided to you as a credit in January.
- No annual fee.
- Use your Home Trust Preferred Visa on purchases made in foreign currencies without added foreign exchange fees², whether you’re spending while abroad or shopping online at home.
- Worldwide access from anywhere you are, for hotel and travel reservations or shopping in-store and online. Access cash at over 2.5 million ATMs in more than 200 countries and territories worldwide.
- Manage your Visa account easily and securely — at any time, and from anywhere. Get your balance and view your transactions at Home Trust Visa Online.
- Purchase Security³: insures eligible items against theft or damage for 90 days from the date of purchase.
- Manage your Home Trust Visa account easily and securely — at anytime from anywhere in the world. View the card’s balance, transactions and pay bills online at Home Trust Visa Online.
- Guaranteed hotel reservations — with this international travel credit card, you can request a guaranteed hotel reservation anywhere in the world and your room will be held for you even if you arrive late.
- Preferred rates: 19.99% for purchases and cash advances.
- To be eligible, $15,000 individual annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live. You cannot currently be in bankruptcy or be a resident of Quebec.
Best credit cards for no credit
Best credit cards for Canadian newcomers
Best newcomer card for: Travel rewards
BMO AIR MILES®† Mastercard®*
It’s rare to find a 0.99% balance transfer offer on a dedicated travel rewards credit card, especially with a low 2% balance transfer fee. Sure, the introductory period is only for nine months, but the BBMO AIR MILES®† Mastercard®* makes it worth its while by adding an extra introductory perk: 800 bonus AIR MILES.
Pros
- No annual fee.
- Ability to earn unlimited rewards.
Cons
- The introductory APR period for transfers is only nine months, so make sure you can pay off your balance during that window of time.
- Welcome offer: Get 800 AIR MILES Bonus Miles!* That’s enough for $80 towards purchases with AIR MILES Cash.*
- Get a 0.99% introductory interest rate on Balance Transfers for 9 months, 2% fee applies to balance amounts transferred.*
- Get 3x the Miles for every $25 spent at participating AIR MILES Partners and 2x the Miles for every $25 spent at any eligible grocery store.*
- Get 1 Mile for every $25 spent everywhere else.*
- Use your BMO AIR MILES Mastercard and AIR MILES Collector Card at an AIR MILES Partner to earn Reward Miles from both.*
- No annual fee.*
- Receive a discount on car rentals.*
- Extended Warranty.*
- Purchase Protection.*
- *Terms and conditions apply.
- BMO is not responsible for maintaining the content on this site. Please click on the Apply now link for the most up to date information.
Best newcomer card for: Cash back rewards
BMO CashBack® Mastercard®*
The BMO CashBack® Mastercard®* offers attractive earn rates on everyday purchases like groceries and utility bills, making it easy to quickly rack up rewards that you can turn into cold hard cash.
Pros
- Attractive introductory offer, especially if you’re interested in a balance transfer.
- No minimum threshold for redeeming your cash-back rewards. Redeem as little as $1 if you want.
Cons
- Accelerated earn rates for groceries and recurring bills are capped at $500 per billing cycle, a ceiling that might be easy to hit if you have a family or higher monthly balances.
- Offers fewer travel perks and types of insurance than some other cards.
- Welcome offer: Get 5% cash back in your first 3 months.*
- Then get 3% cash back on grocery purchases, 1% cash back on recurring bill payments and 0.5% unlimited cash back on all other purchases!*
- Now earn the highest cash back on groceries in Canada without paying an annual fee!†
- Get a 0.99% introductory interest rate on Balance Transfers for 9 months, 2% fee applies to balance amounts transferred.*
- No Annual fee.*
- Want to get your cash back ASAP? Now you can redeem your cash back anytime through direct deposit, as a credit on your statement or into your BMO InvestorLine account.*
- Extended Warranty.*
- Purchase Protection.*
- Receive a discount on car rentals.*
- *Terms and conditions apply.
- †Statement based on a comparison of the non-promotional grocery rewards earn rate on Canadian cash back credit cards as of January 4, 2023.
- BMO is not responsible for maintaining the content on this site. Please click on the Apply now link for the most up to date information.
Best newcomers card for: No foreign transaction fees
Scotiabank Passport™ Visa Infinite* Card
The Scotiabank Passport Visa Infinite Card offers competitive earn rates and easy-to-understand redemption on travel — 1 point equals 1 cent in travel savings.
Pros
- Complimentary Visa Airport Companion Program membership, with six free airport lounge visits included every year, which is more than typically included with a credit card.
- No foreign transaction fees.
Cons
- The accelerated rate on travel purchases only lasts three months — but you can earn up to 42,500 points, worth $425 in travel savings.
- The annual $1,000 bonus requires you to spend $40,000 per year on everyday spending on the card.
- Earn up to $1,100+ in value in the first 12 months, including up to 35,000 bonus Scene+ points and first year annual fee waived on your first supplementary card. Offer Ends January 3, 2024.
- The only major bank credit card offering you no foreign transaction fees, including for shopping online or abroad.
- Your Award Winning Card For Travel.
- Earn 2 Scene+ points on every $1 you spend on eligible grocery stores, dining, entertainment purchases, and daily transit purchases (including buses, subways, taxis and more).
- Earn 1 Scene+ point on every $1 you spend on all other eligible purchases.
- You’ll earn 3X Scene+ points for each dollar charged to your account on all eligible purchases¹ at Sobeys, IGA, Safeway, Foodland, FreshCo, Voilà by Sobeys, Voilà by IGA, Voilà by Safeway, Chalo! FreshCo, Thrifty Foods, IGA West, Les Marchés TradItIon, Rachelle Béry and Co-Op.
- Airport lounge access through complimentary Visa Airport Companion Program membership, plus six complimentary lounge visits per year from the date of enrollment, providing you with access to 1,200+ airport lounges globally, including participating Plaza Premium Lounges.
- Visa Infinite* benefits including Visa Infinite Concierge, Visa Infinite* Luxury Hotel Collection, Visa Infinite* Dining Series, and Entertainment & Lifestyle Offers.
- Access to Scotia SelectPay™.
- To be eligible, $60,000 (individual) or $100,000 (household) annual income is required, or a minimum assets under management of $250,000. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.
- Terms and Conditions Apply. Click ‘Apply Now’ for complete details.
Best credit cards for students
Best overall student card
BMO CashBack® Mastercard®* for Students
The BMO CashBack® Mastercard®* for Students has impressive earn rates — including 3% on groceries — and valuable perks, all without an annual fee.
Pros
- Earn flexible and easy-to-redeem cash rewards on everyday purchases.
- There’s no minimum threshold for redeeming your cash-back rewards. Redeem as little as $1 if you want.
Cons
- Accelerated earn rates for groceries and recurring bills are capped at $500 per billing cycle.
- Insurance is limited to extended warranty and purchase protection.
- Welcome offer: Get 5% cash back in your first 3 months.*
- Then get 3% cash back on grocery purchases, 1% cash back on recurring bill payments and 0.5% unlimited cash back on all other purchases!*
- Now earn the highest cash back on groceries in Canada without paying an annual fee!†
- Get cash back every time you spend, plus start building a healthy credit history.
- Want to get your cash back ASAP? Now you can redeem your cash back anytime through direct deposit, as a credit on your statement or into your BMO InvestorLine account.*
- No Annual fee.*
- Extended Warranty.*
- Purchase Protection.*
- Receive a discount on car rentals.*
- *Terms and conditions apply.
- †Statement based on a comparison of the non-promotional grocery rewards earn rate on Canadian cash back credit cards as of January 4, 2023.
- BMO is not responsible for maintaining the content on this site. Please click on the Apply now link for the most up to date information.
Best for: Customizable spending categories
Tangerine Money-Back Credit Card
You can earn unlimited cash back at a 2% rate in up to three categories of your choice — all while earning 0.50% back on everything else.
Pros
- You can tailor the 2% rewards to your spending by choosing up to three categories from Tangerine’s list of 10, which includes basics like gas and groceries as well as unusual picks like furniture and home improvement.
- Transfer balances within your first 30 days and pay only 1.95% interest on the transferred balance for the first six months (19.95% after that).
Cons
- 2% cash back is a competitive rate, but many cards offer double the rewards on specific categories.
- Tangerine is a virtual bank with no physical bank branches.
- 2% on two categories of your choice: grocery, furniture, restaurants, hotel-motel, gas, recurring bill payments, drug store, home improvement, entertainment, or public transportation and parking.
- Get a third cash-back category by choosing to have your rewards deposited into a Tangerine Savings Account.
- 0.50% on everything else.
- Redeem cash back monthly as a statement credit or deposited into a Tangerine Savings Account.
- No annual fee.
- Transfer balances within your first 30 days and pay only 1.95% interest on the transferred balance for the first six months (19.95% after that). 1% balance transfer fee applies to the amount transferred.
- Get free cards for any authorized users on your account.
- It only includes purchase assurance and extended protection insurance. For more insurance, consider the Tangerine World Mastercard which requires a minimum personal income of $60,000. If you meet this requirement, you will automatically be considered for the World card if you apply for the Money-Back card.
- Preferred rates: 19.95% for purchases and cash advances.
- To be eligible, a $12,000 (individual) annual income is required. Also, you must have a Canadian credit file and be a Canadian resident of the age of majority in the province or territory where you live.
Best student card for: Aeroplan points
CIBC Aeroplan® Visa Card for Students
Credit card beginners can use the CIBC Aeroplan Visa Card for Students to accumulate travel rewards thanks to a solid earn rate and a generous welcome bonus.
Pros
- The welcome bonus has no strings attached or hoops to jump through — simply make a purchase a receive 10,000 Aeroplan points.
- Your Aeroplan membership will help you earn points twice as fast at Aeroplan partners and retailers in the Aeroplan eStore when you pay with your Aeroplan credit card.
Cons
- The higher 20.99% interest rate could be a problem for students learning how to use their first credit card.
- To get the best value, you’ll have to be loyal to Air Canada and the Aeroplan rewards program.
- 1x Aeroplan points per dollar on gas, electric vehicle charging, groceries and Air Canada travel purchases, up to $40,000 annual spend.
- 1x Aeroplan points per $1.50 spent on all other purchases, including gas, electric vehicle charging, groceries and Air Canada travel purchases that exceed the $40,000 threshold.
- Earn points twice at over 150 Aeroplan partners and 170+ online retailers through the Aeroplan eStore.
- Aeroplan Points never expire and can be redeemed for a variety of travel, merchandise, gift card, and other rewards offered by Aeroplan’s participating partners and suppliers.
- $0 annual fee.
- Get three free months of Uber Pass for discounts on rides, meals and more. Offer ends September 8, 2022.
- Earn 1 Aeroplan point for every $6 spent on CIBC Global Money Transfer, with no transaction fees or interest as long as you pay your balance on time. Offer ends June 30, 2022.
- Maximize your points by adding up to three additional cards and giving them to your spouse or other family members. Points can be shared with other Aeroplan members in your household.
- Earn points by using your CIBC Aeroplan Visa to automatically make recurring bill payments.
- Receive preferred pricing when paying for flights with your Aeroplan points.
- Save up to 25% on car rentals at participating Budget and Avis locations worldwide when paying with your card.
- Save up to 10 cents per litre at participating Chevron, Ultramar and Pioneer gas stations if you link your card with Journie Rewards.
- Use the CIBC Pace It feature to make installment payments on large purchases.
- Four types of insurance are provided: auto rental collision and loss damage insurance, purchase security, extended protection insurance, and $100,000 in common carrier accident insurance.
- Preferred rates: 20.99% for purchases, 22.99% for cash advances.
- To be eligible, you must have full-time status in a college or university.
American Express Cobalt® Card
Welcome Offer: Earn up to 15,000 points (up to $150)! In your first year, as a new Cobalt Cardmember, you can earn 1,250 Membership Rewards® points for each monthly billing period in which you spend $750.
Earn 5X points on eligible Eats & Drinks. Earn 3X points on eligible streaming subscriptions. Earn 2X points on Travel and Transit. Terms and Conditions Apply.
Methodology: How we evaluate cards
NerdWallet Canada selected the best credit cards for bad credit based on overall consumer value and their suitability for specific kinds of consumers.
Our evaluation is weighted by several factors, which depend on the card type. For unsecured credit cards: 50% rewards value, 25% intro offer, and 25% fees and interest. For secured cards: 50% features specific to secured credit cards, 30% fees and interest, 12% rewards and 8% intro offer. For prepaid cards: 60% features specific to prepaid cards, 15% fees, 15% rewards, and 10% intro offer.
Rewards value considers earning rates, rewards structure, promotional rates and spending categories.
The intro offer considers the welcome bonus value, promotional interest rates, and any waived fees.
Fees and interest consider the annual fee, additional costs such as foreign transaction fees, and interest rates for purchases, balance transfers and cash advances.
Features specific to secured credit cards include minimum and maximum deposit, ability to upgrade to an unsecured credit card, credit checks and credit reporting.
Features specific to prepaid cards include minimum and maximum deposit, maximum reload amount in any 24-hour period, ATM access, insurance benefits, digital wallet compatibility, and more.
Only reloadable prepaid cards that are available online, secured credit cards with online applications, and unsecured cards that the issuer explicitly markets as suitable for bad or fair credit scores were considered for this list. We only assessed cards available to consumers in multiple Canadian provinces and territories.
Summary of best credit cards for bad credit, fair credit and no credit
| Card name | Best for | Annual fee |
|---|---|---|
| Best overall credit cards for bad credit | ||
| Neo Secured Credit | Best secured credit card for cash back. | $0. |
| KOHO Prepaid Mastercard (Essential Plan) | Best prepaid card to build credit. | $48 ($132 with credit building). |
| Home Trust Secured Visa card (No Annual Fee) | Best no-fee secured card for building credit. | $0. |
| Best overall credit cards for fair credit | ||
| Marriott Bonvoy® American Express®* Card | Best fair credit card for hotel stays. | $120. |
| Neo Credit | Best fair credit card for no annual fee. | $0. |
| Home Trust No Fee Preferred Visa Rewards Credit Card | Honourable mention for fair credit. | $0. |
| Best credit cards for no credit: Canadian newcomers | ||
| BMO AIR MILES®† Mastercard®* for Students | Best newcomer card for travel rewards. | $0. |
| BMO CashBack® Mastercard®* | Best newcomer card for cash back rewards. | $0. |
| Scotiabank Passport® Visa Infinite* Card | Best newcomers card for no foreign transaction fees. | $150. |
| Best credit cards for no credit: Students | ||
| BMO CashBack® Mastercard®* for Students | Best overall student card. | $0. |
| Tangerine Money-Back Credit Card | Best student card for customizable spending categories. | $0. |
| CIBC Aeroplan® Visa Card for Students | Best student card for Aeroplan points. | $0. |
How to get a credit card with bad credit
A poor credit score, or a lack of credit history, isn’t the end of the world — and it doesn’t mean you can’t get a credit card. If you’re looking to build or rehabilitate your credit, a credit card can be a stepping stone to a stronger score.
Credit cards for bad credit connect people with credit options that work for their financial situation. Low or no credit doesn’t need to immobilize you. Numerous card options can help you build your credit.
What credit score is needed for a credit card?
A credit score of 660 or more is typically the eligibility threshold for most credit cards. You can still qualify for a credit card with a lower score, but your card options may be limited. Certain types of credit cards, like prepaid or secured cards, are designed for those with low or no credit.
What is a credit score and how is it calculated?
A credit score is a three-digit number — typically between 300 to 900 — that represents your creditworthiness. The higher your score, the more creditworthy you appear in the eyes of potential lenders. Your score is generated from your credit report by the two major Canadian credit bureaus: Equifax and TransUnion.
The credit bureaus collect information about your payment history from your creditors. They then use this information to calculate your credit score..
Credit scoring models aren’t publicly available, but generally speaking, here’s how credit scores tend to be categorized:
| Poor | 300-559. |
| Fair | 560-659. |
| Good | 660-724. |
| Very good | 725-759. |
| Excellent | 760-900. |
What is a bad credit score in Canada?
A credit score below 560 is considered poor. A score in this range will make qualifying for an unsecured credit card difficult, if not impossible. Even a score of 560 to 659 — fair, by most scoring standards — may result in card denial.
Financial events and factors that may result in a lower credit score include:
- Late bill payments.
- Little to no credit history.
- Too few credit accounts.
- Foreclosures, bankruptcies and delinquencies.
- Past-due accounts being transferred to collections agencies.
- Consistently using most or all of your available credit.
- Opening numerous new accounts in a short period of time.
- Too many different types of credit accounts and not a good mix of debt (credit cards, loans, mortgages, etc.).
How can you tell if you have bad credit?
You can check your credit score by contacting Equifax or TransUnion or using a third-party financial service.
Equifax
Equifax offers online access to your credit score and report when you sign up for a free online subscription. You can also submit a request by phone, by mail or in person and receive a paper copy by mail. You should expect to receive your credit information within five to 10 business days following the request.
TransUnion
You can access your credit report — which TransUnion calls a consumer disclosure — for free through TransUnion’s website. If you live in Quebec, you’ll find your credit score included in your consumer disclosure. Canadians outside of Quebec must sign up for TransUnion’s subscription-based credit monitoring service for $24.95 monthly to see their credit score. This service includes email updates of changes to your credit score, personalized debt analysis and up to $1,000,000 in ID restoration insurance.
Third-party personal finance service or bank
Outside the two major Canadian credit bureaus, you may also be able to check your credit score through a third-party financial service. A number of major Canadian banks, including BMO, CIBC, RBC and Scotiabank, offer credit score access via their online banking platforms and mobile apps.
How long do bad credit events stay on your report?
Negative credit events typically stay on your credit report for six to seven years — though this may fluctuate depending on the nature and severity of the incident, as well as your location. For example, if you live in Prince Edward Island, bankruptcy may stay on your report for up to 10 years.
Easiest types of credit cards to get approved for in Canada
For those with poor credit, certain types of credit cards may be easier to access than others.
| Type | How it works | Chances of approval | Deposit required | Builds credit history? |
|---|---|---|---|---|
| Secured | Requires a cash deposit and builds credit history. | High. | Yes. | Yes. |
| Prepaid (not a line of credit) | Money is loaded onto the card and funds for transactions are withdrawn in real time. | High. | Yes. | Typically no. |
| Store | Offered exclusively by retailers and can only be used at the affiliated store. | Varies. | No. | Yes. |
| Student | Unsecured credit card, typically with a low credit limit, for students with limited credit history. | High — but may be restricted to students. | No. | Yes. |
| Newcomer | Unsecured credit card, typically with a low credit limit, for Canadian newcomers with little to no credit history. | High — but may be restricted to newcomers to Canada. | No. | Yes. |
Secured credit cards
A secured credit card requires a cash deposit to open an account. The amount that you deposit typically becomes your credit limit. So, if you deposit $500, your credit limit will be $500. Secured cards work just like other credit cards. You can use them wherever credit cards are accepted, and you’ll accrue interest on any outstanding balances.
Secured credit cards give card issuers peace of mind because if you fail to pay your bill on time, they will take money from your initial security deposit to repay the balance. In this way, these cards are secured by the initial deposit you make when you open your account — hence the name. These cards differ from traditional credit cards, also called unsecured cards, which aren’t secured by any form of deposit.
If you consistently pay your bill on time, one of the best secured cards in Canada can help you build your credit and improve your score. Plus, you’ll get your initial deposit back when you close your account.
Which makes sense for you? Secured vs. Unsecured Credit Cards: How to Choose
Prepaid cards
A prepaid card is sort of like a debit card: you load money onto your card and spend the balance when you make a purchase.
Transactions charged to a prepaid card are withdrawn from available funds in real time. Unlike a traditional credit card, a prepaid card won’t help you build your credit score because your transactions aren’t typically reported to the credit bureaus, so your credit history and score aren’t impacted by using the card.
So, why get a prepaid card? Well, you can use them wherever traditional credit cards are accepted, and the best prepaid cards earn rewards or boast other special features. Plus, they don’t require a credit check, which means those with low or no credit are eligible to apply.
Store credit cards
Store credit cards — also called retail credit cards — are cards offered exclusively by retailers. You can only use these cards at the associated store, but they tend to provide appealing perks and rewards.
Student credit cards
Student cards are unsecured cards that often have low or no annual fees and attractive perks, like rewards and insurance coverage. While many entry-level unsecured credit cards may be suitable for students, some issuers specifically offer official student-branded credit cards that have fewer criteria for acceptance.
To qualify for these official student cards, you must be the age of majority in your province or territory — no credit check required. You may be asked to demonstrate that you’re a post-secondary student by providing proof of enrollment. You’ll begin building your credit history as you use one of the best student credit cards.
Newcomer credit cards
Recently moved to Canada? Finding a credit card as a newcomer with no Canadian credit score or history may feel like a daunting task. But each of the Big Six banks in Canada — BMO, CIBC, National Bank, RBC, Scotiabank and TD Bank — offer credit cards specifically designed for newcomers.
These cards typically don’t require an established credit history to apply.. Many newcomer cards boast the same perks and rewards programs as traditional credit cards.
Eligible applicants must be the age of majority in the province or territory where they live and must provide some personal information, like their date of birth, residential address and Social Insurance Number. Sometimes, proof of status as a Canadian newcomer, like a Canadian Permanent Resident Card, confirmation of Permanent Residence, or a work or study permit, is required.
Cards for Canadian newcomers tend to have lower credit limits — often ranging between $5,000 to $15,000.
Establishing your credit score as a newcomer to Canada
Some financial institutions may accept credit history from outside of Canada, but this isn’t always the case. So, one of the best ways to build your credit score as a newcomer to Canada is to apply for a credit card. Credit cards establish your credit history and contribute to your credit report. Payment and credit history can have a big impact on your credit score, so don’t delay.
Loan and line of credit payments also contribute to your credit history, so don’t be shy about having more than one credit product. So long as you pay your bills on time, you’ll be well on your way to building your Canadian credit history and getting one of the best credit cards available.
Guaranteed approval for credit cards for bad credit
Guaranteed approval credit cards guarantee your card approval as long as you meet the eligibility criteria. Cards with guaranteed approval are rare and are typically secured credit cards.
Eligibility criteria for these cards typically include the following:
- Canadian residency.
- Age of majority in your province or territory.
- Minimum security deposit requirements.
Credit cards for fair credit Canada
Most unsecured cards require a credit score of at least 660 to qualify, but there are some cards open to people in the fair credit score range. If you have fair credit, you’ll find fewer cards to choose from, but if you use your card responsibly, your score will improve and more card options will become available over time.
How to compare credit cards for bad credit
Consider the following before you fill out a credit card application:
- Credit check. If you don’t feel confident about your score, seek a card that doesn’t require a credit check.
- Eligibility criteria. Some credit cards for low or no credit are strictly limited to those who meet certain eligibility criteria, like newcomers to Canada or post-secondary school students.
- Deposit. A card that requires a deposit may be easier to qualify for but could be a dealbreaker for those who don’t have the necessary funds on hand.
- Card features. Insurance, rewards, travel perks, interest rates — no two credit cards are the same, so consider benefits and features to find the card best suited to your lifestyle.
How to apply for a credit card with bad credit
Finding the credit card that works best for your financial situation can help you rebuild your credit and improve your credit score.
Here’s how to apply for a credit card with bad credit:
- Know your credit score. Your credit score is important information that will help you make an informed decision about the card you pursue. With it, you’ll be able to target cards you have a chance of being approved for and avoid an application rejection, which could harm your score. Get your credit score from your bank or one of the credit bureaus.
- Explore your options. Secured and prepaid cards are both viable choices for someone with bad credit. These cards will have different credit limits, interest rates and perks, so weigh your options carefully.
- Complete an application. No matter how eager you are to get a credit card, try to limit yourself to a single card application at a time. Card applications impact your credit score and multiple applications could act as a red flag for providers and hurt your chances of approval.
Does applying for a credit card affect your credit score?
Applying for a credit card can negatively affect your score. Each time you submit a credit card application, the card issuer must perform a hard credit inquiry. These hard credit checks can drop your score by a few points, regardless of whether you’re approved or not.
Do multiple credit cards affect your credit score?
Whether having multiple credit cards will positively or negatively impact your score depends more on how you use them than how many you carry. Having more than one credit card increases your combined credit limit. So long as you don’t max out both cards, the increased credit limit means your credit utilization ratio will drop, which can positively impact your credit score.
That said, you may run into trouble if you have multiple cards that you consistently keep at or near their credit limit. Failing to pay your credit card bill on time will also hurt your score.
A good rule of thumb when you carry multiple cards is to keep your credit utilization low — 30% of your overall limit or less — and automate your card payments so you never fall behind.
6 ways to improve credit score
If you have a bad credit score, don’t panic. There are numerous ways to improve your credit.
- Get a credit card to rebuild credit. A credit card can help you rehabilitate your credit score, so long as you use it responsibly and consistently pay your bill on time.
- Limit your credit applications. Whether it’s a card or another form of credit, like a loan, limit your applications to avoid too many hard credit checks on your record. Also: numerous applications may look suspicious in the eyes of your potential lenders.
- Automate your payments. Missed or late payments can have a huge impact on your credit score. Consider automating your monthly bill payments — utilities, mobile phone, student loans — all of these impact your credit score.
- Use less than 30% of your available credit. Keeping your credit utilization low can have a positive impact on your credit score.
- Check your credit report for inaccuracies. Sometimes lenders get it wrong, which means there could be inaccuracies in your credit report. You can dispute these inaccuracies and have them corrected.
- Keep old accounts open. If you have old accounts you’ve paid off, consider leaving them open. The longer your credit history, the better. Keep old accounts active by using them every so often and immediately pay off what you owe. If you have to close your account, make sure you cancel your credit card the right way.
How long does it take for your credit score to change?
Credit reports are typically updated once every 30 to 90 days. Your credit score will change based on the information in your credit report. Each new piece of information added to your report has the potential to impact your credit score.
Frequently asked questions about getting a credit card with bad credit
Most unsecured credit cards require a credit score of 660 or more to qualify. But cards for those with fair, poor or no credit are available.
Credit cards that don’t require a credit check are designed for those with poor or no credit. Instead of relying on a credit check, secured and prepaid cards require a cash deposit to open an account. Unsecured credit cards for Canadian immigrants may also be available without a credit check.
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