Best Credit Cards for Canadians

Great news! These credit cards offer guaranteed approval to everyone in Canada and there are absolutely no credit checks and high credit limits.

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Bad credit can prevent you from accessing lots of things, from getting an apartment lease to getting a car loan. But if you follow the right steps, you can improve your credit and secure a better financial future.

Although rebuilding your credit score can be a long and winding process, it’s possible. If you’re trying to improve your credit score, we recommend you get a new credit card.

In Canada, many credit card companies will offer you a card, even if you have a low credit score or bad credit history.

In this short but comprehensive guide, we’ve provided you with steps on how you can improve your credit score. Also, we’ve covered secured and guaranteed credit cards and highlighted the four best credit cards that can meet your needs.

How to Improve Your Credit Score

Proper use of your credit card is a guaranteed way of improving your credit score. Below are a few ways of raising your credit score:

Improve your Payment History

This factor alone will account for up to 35% of your total score. Keep in mind that skipped payments will reflect on your credit history for a long period. To address this issue, ensure you make timely payments. Regular payments will also boost your credit score.

In case you keep forgetting, consider setting several reminders by email or text message when the payment is due. You can also use autopay to stay on top of your payment schedule.

Credit Utilization Ratio

This is the amount of your credit card balance compared to your credit limit. It also affects your credit score by up to 30%. We highly recommend that you use less than 30% of your current credit limit.

A new card will mean an increase in available credit and a decrease in credit utilization. To better explain this context, let’s use an example.

If an individual has $2,000 available credit and a balance of $1,000, then his credit utilization is 50%. If this individual gains a new card with a credit of $1,000, his new credit balance will increase to $3,000. The previous credit of $1,000 will now be nearly 33% of his new available credit.

As you can see, the credit utilization dropped from 50% to 30%.

However, if you make a mega purchase using your new line of credit.  It will negatively affect both your credit utilization and your credit score. You must clear all your balance each month to maintain a low credit utilization.

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Secured Cards vs Guaranteed Credit Cards

It’s impossible to get regular credit if you have a bad credit score and payment history. But you can qualify for a secured, or a guaranteed card.

What’s a Guaranteed Card?

A guaranteed card is a card that almost everyone can qualify for. We’re using “almost” since there’s no credit card that can 100% approve everyone. Some cards are designed and marketed towards individuals with poor credit scores and bad payment history. But there are some criteria these individuals must meet.

As a prerequisite, several companies will require you to fill a questionnaire. As such, they can check if you qualify for a credit card without undergoing a credit check.

If you don’t qualify for their credit card, you can consider a different option without going through a credit check. A credit check will most likely decrease your score.

What’s a Secured Card?

Unlike guaranteed cards, you can activate a secured card by paying a security deposit. In most instances, the deposit is equivalent to the credit limit. The deposit usually ranges between $200 and $1000. If you terminate your account, you will receive a full refund of your deposit. But that’s if you’ve cleared off your entire balance.

Since the deposit can act as collateral, you can qualify for a second credit irrespective of your credit history. Clearing all your monthly balances will rebuild your credit score and improve your payment history. And who knows! Your credit card provider might eventually upgrade you to an unsecured credit card, and you can get your security deposit back.

4 Best Credit Cards for Bad Credit

As we mentioned earlier, many companies offer credit cards to individuals with bad credit. Remember, all these credit cards come with unique features. So research first before applying for them.

If you’re in the market for a credit card, but you have bad credit, consider the following cards:

Capital One Credit Card

First on our list is the Capital One Credit Guaranteed Credit Card. It’s among the best card for reconstructing or establishing credit. To qualify for the card, you must meet the following requirements:

  • You’re the same age as the majority group in your region.
  • Not in possession of a Capital One Card.
  • Within the previous 12 months, you haven’t had a Capital One account in poor standing.
  • You haven’t applied for the Capital One Card more than once in the last month.

Based on your credit history, this credit company might offer you either a secured or unsecured credit card. Once you’ve secured the card, your credit limit will range between $300 and $7,000.

The card also comes with an APR of 19.8% and a yearly charge of $59. This credit company reports your card activity to credit agencies monthly. So, it’s wise to keep your balance low balance to essential to raise your credit score.

Refresh Financial Credit Card

Refresh Financial credit cards offer individuals with bad credit Secured Visa cards. These are the only requirements:

  • A Canadian ID
  • A minimum monthly income
  • A bank account

There’s don’t perform a credit check. So, you can qualify for the card even if you have bad credit. Your credit limit will depend on your security deposit size. It usually ranges between $200 and $10,000.

The credit card has an APR of 17.99%, and a yearly charge of only $12.95. Refresh Financial offers an unpaid F.I.T, an education program on finances. As a result, people can learn how to rebuild their credit.

BMO Credit Card

BMO offers a wide range of personal banking services, including loans, mortgages, insurances, and credit. The company-secured credit card is a reloadable Mastercard.

The card security deposit ranges between $100 and $10,000 and is equivalent to the user credit line. Also, users can use the company’s credit card in over 30 million locations.

You will pay an annual charge is $6.95 only, and with no interest rate on what you purchase. BMO’s prepaid credit card is ideal for those who wish to reconstruct or establish their credit.

Since the deposit is equivalent to the credit line, many individuals receive approval for the credit card. Applying for the card is a hassle-free process that requires you to fill out an online form. Within minutes, you will find out whether you’re approved.

Home Trust Credit Card

With this Secured Card, you can pay a security deposit, ranging between $500 and $10,000. Just like with BMO Secured Credit Cards, the user’s security deposit equals his or her credit line.

What’s even better, the more you deposit, the higher your security deposit. The card has an APR of 19.99% with no yearly charge or 14.9% plus a $59 annual charge.

The company insists that users pay their deposit during the application process. If you’re applying online, you can send your deposit through mail. Alternatively, you can mail both your credit card application and security deposit to the company.

Despite a 95% approval rate, Home Trust doesn’t approve persons who’re in bankruptcy at the moment. The company will refund your security deposit just in case your application is unsuccessful.

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