Credit scores can be a tricky thing and getting a credit card when you bad credit can be even trickier…
Getting a loan? Credit check. Need a cell phone plan? Credit check.
Sometimes, even landlords will check your credit ‒ before considering you as a potential tenant. And the list doesn’t end here.
These 3 digits follow you, and have a big say in different areas of your life.
The unfortunate thing is that bad credit scores aren’t always a product of your own poor decisions.
Identity theft, divorce, getting laid off, co-signing for someone else’s loan, even just forgetting to pay bills – all of these things can hurt your credit score.
But, what’s a credit card got to do with your credit score and can you still get a credit card even if you have a bad credit score?
But first, here are our top picks:
|Credit Card||Card Type||Noteworthy Features||Card Details|
|Home Trust Secured Visa Card||Secured||
|Home Trust Secured Visa (Low Rate) Card||Low Interest||
|MBNA True Line Mastercard||Low Interest||
Getting Approved Even When You Have Poor Credit
Credit cards are convenient, secure, and can be helpful in your quest to build credit.
If used responsibly and always paid on time, you can establish a clean payment history.
The challenge? If you have had credit issues in the past, or you only just started working on your credit, credit cards are not always easy to get.
That doesn’t mean you have no options. There are a few types of credit cards that can be obtained or help you out, even if you have bad credit or have a lot of credit card debt:
- Secured credit cards
- Guaranteed credit cards
- Low interest credit cards
- Prepaid credit cards
- Store credit cards
- Balance transfer credit cards
These are a good starting point for someone who is looking to get approved…
So, let’s break down these credit card types and give you some of the best credit cards in each category. That way, no matter where your credit score is sitting as you read this, you will hopefully be able to find a card that suits your needs.
Secured and Guaranteed Credit Cards for Bad Credit
Virtually everyone wants guaranteed approval, right?
Even more so if you’ve been struggling to get a credit card.
Typically credit cards will come with some sort of basic requirements, and that’s no different here. The good news is that guaranteed cards usually ask less from their cardholders.
Often, you only need to meet a few key requirements, such as:
- being the age of majority, and
- not having a credit card with the same company, especially one that is in bad standing.
Some cards may even require you to make a security deposit or a down payment.
Secured Credit Cards
If you have a poor credit score, a secured credit card is an option.
Secured credit cards require you to make an upfront payment, often called a security deposit or a down payment, that matches the limit of your credit card.
In most cases, these funds will stay with your credit card issuer until your credit card account is closed and your balance is paid off in full.
The security funds that you pay are used as collateral. So if you max out your card and don’t pay it back, the bank has that money to put against your debt.
Many of the big banks offer secured credit cards, but they are not all for fixing poor credit. Banks like RBC and BMO offer secured credit cards that are targeted specifically for newcomers and immigrants, as well as international students who are looking to establish credit.
Then there’s CIBC, TD, and Scotiabank ‒ three banks that offer a few of the cards in their regular line-up as secured cards. This means that not only can you work towards restoring your credit, but in some cases, you can also earn valuable rewards and gain access to some pretty sweet perks. One thing to keep in mind? You cannot apply for these cards online, you’ll need to go into a local branch and apply in person.
One secured credit card that you are able to apply for online is the
Possibly an even better option, the
The great thing about these cards is Home Trust will report back to Equifax and Transnion every month, helping you build your credit back up.
The deposit required ranges for these cards are anywhere from $500 to $10,000 and virtually everyone is approved, even if you have declared bankruptcy in the past (although a discharge certificate may be required). When you decide to close out your account, your deposit is returned to you.
One of the most notable things about Home Trust Secured Visa is that it’s one of the few credit cards in Canada that charges you a reduced rate of 2% on your foreign currency transactions. Most other cards charge you 2.5%, so this feature ends up saving you 0.5% whenever you shop in another country or make a purchase in a foreign currency.
Guaranteed Credit Cards
Guaranteed credit cards are some of the rarest cards on the market, and Capital One offers more than one:
- Capital One Guaranteed Mastercard ‒ This card could require you to make a down payment anywhere between $75 and $300.
- Capital One Low Rate Guaranteed Mastercard ‒ This card could require you to make a down payment anywhere between $75 and $300.
- Capital One Guaranteed Secured Mastercard ‒ Depending on your credit score, you might be given the Capital One Guaranteed Secured Mastercard, even if you apply for one of the other two cards. The main difference is that this card will require you to make a down payment anywhere between $75 and $300.
Another guaranteed card that is on the Canadian Market right now is
Unsecured Credit Cards for Bad Credit
Credit cards that require you to make a down payment in order to get approved are not the only option if you have bad credit.
These unsecured credit cards could be for you if:
- You’re unsure if you will be approved for a regular credit card.
- You’d rather not have your money tied-up in a secured credit card’s security deposit.
- You’re uncertain if you can trust yourself with a credit card.
- You have pre-existing credit card debt that you would like to get rid of now, and work work towards getting your credit score back on track.
If you can relate to any of those statements, keep reading…
Low Interest Credit Cards
Please note: These credit cards have a more strict approval rate and are not suggested if you currently have a poor credit score.
Low interest credit cards could help save you money if you’re carrying a balance on your card.
Curious how much a low interest card could save you? Have a look at our credit card interest calculator:
If you have had issues with high interest credit cards in the past, have worked hard to get your credit score back up, and you’re looking for a low interest rate credit card to help you stay on track – the
Then there’s also the
Prepaid Credit Cards
Prepaid credit cards are a great option if you need a credit card, but you’re not quite ready for the real thing.
Perhaps, you don’t trust yourself yet to have access to a credit card. Or maybe you don’t currently have the funds to give a credit card issuer a lump sum as a security deposit. If this is you, then a prepaid card could be a good starting point.
There are two different kinds of prepaid cards:
- One time use prepaid gift card credit cards – These can often be purchased in a store or online at a set amount. These cards cannot be reloaded, often have attached fees, and if they aren’t used up within a certain amount of time, they can expire.
- Reloadable credit cards ‒ These cards will be issued by a bank and can be preloaded with money as you need it. They can be linked to your bank account, for easy reloading, and work just like a normal credit card.
Prepaid cards are great for a lot of things, but one important thing to keep is that they do not help your credit score.
So, if you’re looking for a card that can help you get your credit score in order…these are not the cards for you.
Store Credit Cards
One type of credit card that can be easy to be approved for, even if you have a lower credit score, is a store credit card.
Perhaps you don’t want your money tied up in a security deposit, or maybe you want more than just a basic credit card. You’re looking for something that will give you valuable rewards and even a little insurance. If that is the case, a store card could be an interesting option.
While we can’t make any guarantees on approval, stores like
One of those store cards could be a great place to start if your credit score isn’t the worst, but you have your doubts of getting approved by most banks.
Balance Transfer Credit Cards
A good balance transfer credit card is great for anyone who has been in the credit card game before and has some pre existing debt hanging over their head.
These cards allow you to transfer your debt from one credit card to another. And while these cards are not specifically made for people who have poor credit, they are there to help you if you feel like you’re headed down that path, or you’re having a hard time staying on top of your current card’s hefty 20% interest charges.
One of the best cards for this, is the
A few things to remember…
Access to credit can be enticing, and it can even lift your credit score if used properly. But it may not be for everyone. (And that’s ok, because there’s also debit and cash.)
So, before you decide to apply, please keep these things in mind:
- Credit cards are not extra income and should only be used to purchase things you were planning on purchasing anyway.
- The goal here is to get into better habits. If you need to set reminders, do it. If you need to ask someone for help, do it. If you need to put your credit card in a block of ice in the freezer, do it.
- Credit cards should be paid in FULL every month, or at the very least, you need to pay the minimum payment before the payment due date. (Only paying the minimum payment is going to get you nowhere…fast.)
- Never miss a payment or your credit will suffer for a very LONG time.
We Would Love to Hear From You
Have you used a secured or unsecured credit card in the past to help you get your credit score moving in the right direction.
Let us know in the comments below.