9 Best Credit Cards for Bad Credit in Canada for 2024
Oct 15, 2024Credit cards for no or bad credit can help build your credit score so long as you keep your balance low and pay your bill on time.
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.
Best overall credit cards for bad credit in Canada
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Card detailsBest credit cards for no credit: Canadian newcomers
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Card detailsBest credit cards for no credit: Students
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BACK TO TOPNerdWallet 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.
Featuresspecific to secured credit cards include minimum and maximum deposit, ability to upgrade to an unsecured credit card, credit checks and credit reporting.
Featuresspecific 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.
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:
Credit rating | Credit score range |
|---|---|
Poor | 300-599. |
Fair | 600-659. |
Good | 660-724. |
Very good | 725-759. |
Excellent | 760-900. |
What is a bad credit score in Canada?
A credit score below 600 is considered poor. A score in this range will make qualifying for an unsecured credit card difficult, if not impossible. Even a score of 600 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
What is the minimum credit score for credit card approval in Canada?
What is the minimum credit score for credit card approval in Canada?
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.
What is a no credit check credit card?
What is a no credit check credit card?
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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