Top 5 Best Credit Cards for Bad Credit in Canada
If you have bad credit or are looking to rebuild your credit score in Canada, choosing the right credit card is essential. Some credit cards are
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specifically designed for individuals with poor credit, offering a pathway to improve your financial standing.
This article explores the best credit cards for bad credit in Canada, their eligibility criteria, and how to apply for them.
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Best Credit Cards for Bad Credit in Canada
There are a variety of credit cards available in Canada that cater to individuals with bad credit. These cards often come with lower credit limits, fewer rewards, and higher fees, but they provide a great opportunity to rebuild credit. The key to success is responsible use, such as paying bills on time and keeping balances low.
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Eligibility Criteria for Guaranteed Approval for Best Credit Cards for Bad Credit in Canada
Guaranteed approval credit cards are designed for those with poor credit or no credit history. While these cards may guarantee approval, they usually require that the applicant meet basic eligibility criteria:
- Age: Must be the age of majority in your province or territory.
- Income: A steady source of income is required.
- Identification: Valid Canadian identification and proof of residence.
- Security Deposit (for secured cards): Some cards may require a refundable security deposit.
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How to Apply for the Best Credit Cards for Bad Credit in Canada?
Applying for a credit card for bad credit in Canada is straightforward. Here are the typical steps:
Research: Compare the different cards available and their terms, fees, and interest rates.
Check Eligibility: Ensure you meet the basic eligibility criteria.
Prepare Documentation: Have your identification, proof of income, and other documents ready.
Submit Application: Apply online through the issuer’s website or visit a branch (if applicable).
Provide a Deposit (if required for secured cards): Some secured credit cards require a deposit, usually equal to your credit limit.
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Best Credit Cards for Bad Credit in Canada
Here are the top five credit cards for bad credit in Canada in 2024:
KOHO Prepaid Mastercard
The KOHO Prepaid Mastercard allows users to load funds onto the card and spend without accumulating debt. While it is technically a prepaid card, KOHO helps users track spending and build better financial habits.
Top Features:
- No interest charges
- Cashback rewards on purchases
- Helps build credit with KOHO’s credit-building program
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Capital One Guaranteed Mastercard
This card offers guaranteed approval for those with bad credit or no credit history, making it a good option for individuals rebuilding their credit.
Top Features:
- Guaranteed approval if basic criteria are met
- Low credit limits to start
- Helps build credit with timely payments
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Neo Secured Mastercard
The Neo Secured Mastercard is a great option for Canadians with bad credit, offering cash-back rewards and the chance to improve credit scores.
Top Features:
- Cashback on purchases
- No annual fees
- Flexible security deposit options
Home Trust Secured Visa Card
This secured credit card allows individuals with bad credit to rebuild their credit score. A security deposit is required, but it functions like a regular credit card.
Top Features:
- Security deposit starting at $500
- Reports to credit bureaus to help rebuild credit
- Option to increase credit limit with additional deposits
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Plastik Secured Credit Card
The Plastik Secured Credit Card is another secured option, offering a reliable way to rebuild credit for individuals with poor credit histories.
Top Features:
- No annual fee
- Reports to Canadian credit bureaus
- Low minimum deposit required
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Types of Credit Cards for People With Bad Credit in Canada
There are two primary types of credit cards for people with bad credit in Canada:
Secured Credit Cards: These cards require a security deposit, which typically serves as the credit limit. Payments are reported to credit bureaus, helping users rebuild their credit.
Prepaid Credit Cards: Although prepaid cards don’t technically affect your credit score, they allow users to manage their spending and can be used as a financial tool for budgeting.
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How to Build a Credit Score as a Newcomer in Canada
Building credit as a newcomer to Canada can be challenging, but it’s essential for future financial opportunities. Here are steps to start building your credit score:
- Apply for a secured credit card
- Pay bills on time
- Keep your credit utilization low
- Monitor your credit score regularly
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What is a Bad Credit Score in Canada?
In Canada, a credit score typically ranges from 300 to 900. A score below 600 is generally considered bad credit. Individuals with scores in this range may face difficulties obtaining loans or credit cards without high fees or interest rates.
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Credit Cards That Provide $1000, $2000, $3000, $5000, $10000 & $20000 Limits Guaranteed Approval
There are guaranteed approval cards that offer varying credit limits depending on your financial situation and credit history. Some examples include:
Guaranteed Approval Credit Cards With $1000 Limits For Bad Credit And No Deposit
Cards with smaller limits, like $1000, are often easier to get approved for and help users rebuild their credit without requiring a deposit.
Credit Cards with $2000 and $3000 Limits Guaranteed Approval
These limits offer a bit more flexibility and are typically available to individuals with slightly better credit histories or a proven track record of responsible card usage.
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Credit Cards with $5000 Limits Guaranteed Approval
Secured cards that allow for higher credit limits are available for individuals who are willing to provide a larger security deposit.
Credit Cards with $10000 and $20000 Limits Guaranteed Approval
These high-limit cards are typically for individuals with better credit, but some secured cards may offer these limits with a large deposit.
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FAQs
Does Applying for a Credit Card Affect Your Credit Score?
Yes, applying for a credit card results in a hard inquiry, which can temporarily lower your credit score. However, responsible credit use will ultimately help improve your score over time.
How to Rebuild Credit with a Credit Card?
To rebuild credit, focus on making timely payments, keeping your balance low, and avoiding maxing out your card. Over time, this will reflect positively on your credit report.
What is the Best Credit Card for Bad Credit in Canada?
The best credit card for bad credit depends on your individual needs. For those looking for flexibility, the KOHO Prepaid Mastercard is a great option, while those wanting to improve their credit score might consider the Capital One Guaranteed Mastercard.
Do Prepaid Credit Cards Affect Your Credit Score?
Prepaid credit cards do not affect your credit score since they don’t involve borrowing. However, secured credit cards do impact your credit score, as they function like traditional credit cards and report your payment behavior to credit bureaus.
Conclusion
Rebuilding credit takes time and discipline, but with the right credit card for bad credit, you can improve your financial standing. The best credit cards for bad credit in Canada offer solutions that help you manage debt responsibly while providing opportunities to build a better credit score over time. Whether you opt for a secured or guaranteed approval credit card, using it wisely will set you on the path toward better financial health.