Credit Assess
Your Path to Better Credit in Canada
A comprehensive guide for Canadians navigating credit card choices with a low credit score.
1. Understand Your Options
Secured Credit Cards
You provide a cash deposit that acts as your credit limit. This collateral makes them easier to approve.
- High approval rates, even with poor credit.
- Reports to credit bureaus, helping to build credit history.
- Deposit is refundable when the account is closed and balance paid.
- Requires an upfront cash deposit.
Unsecured Credit Cards (for Bad Credit)
Traditional credit cards that do not require a security deposit.
- No upfront cash needed.
- Can offer rewards or other benefits (less common with bad credit).
- More challenging to qualify for with a low score.
- Often come with lower limits, higher interest rates, and potential fees.
Prepaid Cards with Credit-Building Features
You load funds onto the card. Some offer an optional program that reports payments to credit bureaus.
- No credit check required for the card itself.
- Helps avoid debt as you can only spend what you load.
- The card itself doesn’t build credit; a separate service does.
- May involve additional fees for the credit-building feature.
2. Key Factors to Consider
Annual Fees
Opt for cards with low or no annual fees to minimize costs while you work on your credit.
Security Deposit
For secured cards, ensure the minimum deposit is affordable for your budget.
Interest Rate (APR)
Even if you plan to pay in full, a lower APR is always better in case you carry a balance.
Credit Bureau Reporting
Crucially, ensure the card issuer reports to both Equifax and TransUnion Canada.
Credit Limit
A manageable limit helps you keep your credit utilization ratio low, which is good for your score.
3. Tips for Rebuilding Your Credit
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1
Pay Your Bills on Time
This is the single most important factor. Set up reminders or automatic payments to ensure you never miss a due date.
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2
Keep Your Credit Utilization Low
Aim to keep your credit card balance below 30% of your available limit. For example, if your limit is $500, try to keep your balance under $150.
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3
Don’t Apply for Too Many Cards
Each credit application creates a “hard inquiry” on your report, which can temporarily lower your score. Apply for one card at a time.
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4
Monitor Your Progress
Regularly check your credit report (free from Equifax and TransUnion) to ensure accuracy and track your score’s improvement.
Disclaimer: This infographic provides general information and is not financial advice. It’s important to research specific credit card products and their terms and conditions, as well as consider your personal financial situation, before applying.
