Rebuilding your credit score is one of the critical financial decisions you should make if you have a low credit. The reason is that the better your credit score, the better your rate on loans, line of credit, mortgages and other financial products.
With so many options available, credit cards have been proven to be among the best vehicles for rebuilding credit scores in Canada.
In this article, I cover the best credit cards to rebuild credit in Canada using secured credit cards, unsecured credit cards and prepaid card in Canada.
Best Secured Credit Cards to Rebuild Your Credit
Secured credit cards got their name on the basis that they require a security deposit to use them. The amount of security deposit you make will usually be the credit you will get on the secured card.
The aim of the security deposit is to protect your lender against default. Hence, approval are almost guaranteed and you can only access the security deposit when you close your account.
Secured credit cards help you rebuild your credit as all your monthly balance payments will be reported to credit bureaus.
The following are some of the current best secured credit cards in Canada.
1. Neo Financial Secured Card
- Minimum deposit: $50
- Annual fee: $0
- APR on purchase: 19.99% to 24.99%
The Neo Financial Secured Mastercard stands out among the competition due to its low minimum deposit, competitive cashback and zero annual and monthly fees.
The Neo Secured Mastercard is a digital and physical credit card that requires a low minimum security deposit of $50.
When you make your first purchase with the card, you will get a competitive promotional offer of up to 15% cashback. This is one of the highest promotional cashback you will find in Canada.
Subsequently, you will get a minimum of 5% cashback for purchases at partner stores and 1% cashback for every other purchase with the card.
Interestingly, the card has guaranteed approval regardless of your credit and doesn’t impact your score.
Read more: Neo Financial Secured Card Review
2. Home Trust Secured Visa
- Minimum deposit: $500
- Annual fee: $0/$59
- APR on purchase: 19.99%/14.90%
The Home Trust Secured Visa is one of the popular and best secured credit cards in Canada for obvious reasons. First, the secured card is accessible regardless of your credit score.
Secondly, Home Trust Secured Visa comes into tiers. The first tier has no annual fee with 19.99% interest on purchases. The second tier has a $59 annual fee with a low interest of 14.90%.
You can’t make the wrong choice with any of the secured cards as they both help you rebuild your credit with a maximum security deposit of $10,000.
What I also like about the Home Trust Secured Visa cards is that they have comprehensive insurance including Purchase Protection and Zero Liability policy,
That said, the cards are available to all parts of Canada except Québec.
3. Refresh Financial Secured Card
- Minimum deposit: $200
- Annual fee: $12.95
- APR on purchase: 17.99%
The Refresh Financial Secured Card is a low-interest secured card that operates on the Visa network.
The card has a $10,000 maximum security deposit with 17.99% interest on purchases, a $12.95 annual fee, and a $3 monthly maintenance fee.
In addition to guaranteed approval and no credit check, the card also has a relatively low minimum security deposit of $200, making it more accessible.
If you’re not concerned about the annual and monthly fees, you can save costs while rebuilding your credit with the Refresh Financial Secured Card.
Related: Refresh Financial Review
4. Plastk Secured Credit Card
- Minimum deposit: $300
- Annual fee: $48
- APR on purchase: 17.99%
Are you looking for a reward secured card with a low-interest rate to rebuild credit? You can’t make the wrong choice with the Plastk Secured Credit Card.
This secured Visa card sets itself apart with its competitive 17.99% interest on purchases and reward points on eligible purchases.
As a new user, you will get a 5,000 points welcome bonus (valued at $20) and a $0 APR on purchase for your first three months of card membership.
What I also like about the Plastk Secured Credit Card is that it offers access to Equifax credit score and report that helps you rebuild your score while tracking your progress in one dashboard.
However, the card has a $6 monthly maintenance fee and a $48 annual fee. If the fees do not concern you, the card is worthwhile due to its robust benefits.
5. Scotiabank Value Visa Card
- Minimum deposit: $500
- Annual fee: $29
- APR on purchase: 12.99%
The last but not the least secured card you should consider is the Scotiabank Value Visa Card. I included this card on my list due to its relatively low interest of 12.99%.
This low interest applies to purchases, cash advances and balance transfers.
Even more, the card has an extremely low introductory balance transfer rate of 0.99%. This offer lasts for your first six months of card membership.
That said, the Scotiabank Value Visa Card also stands out due to its wide range of insurance coverage, such as:
- Job loss benefit
- Critical illness benefit
- Disability benefit
- Hospitalization benefit
- Strike or lockout benefit
- Death benefit
If you set aside the $29 annual fee of the card, you will see how best it competes with other secured cards in Canada.
Learn more: Best Secured Credit Cards in Canada
Best Unsecured Credit Cards to Rebuild Your Credit
Unlike secured credit cards, unsecured credit cards offer recurring lines of credit you can use to make purchases without an upfront deposit.
Since you’re not required to make a security deposit, most unsecured credit cards determine your eligibility using your current score.
However, different unsecured credit card lenders have different score requirements with some catering to those with bad credit. This means that you can get approval even with a low credit score.
The following are some of the best unsecured credit cards you should consider. They’ve been chosen based on their low credit score requirement.
6. Neo Financial Credit Card
If you have a 600 or more credit score, you could be eligible for the Neo Financial Credit Card which comes in three tiers as follows:
- Standard: This Neo Financial Mastercard has no annual fee and rewards you with 4% cashback when you make purchases at Neo partner stores.
- Neo Plus: This Neo Financial Mastercard has a $2.99 monthly fee and rewards you with 5% cashback when you make purchases at partner stores.
- Neo Ultra: This card has $8.99 monthly fee and rewards you with 6% cashback when you make purchases at Neo partner stores.
All the Neo Financial Mastercard reward you with a high promotional cashback of up to 15% when you make your first purchase at partner locations. They also reward you with 1% cashback on every other purchase.
The downside of the Neo Financial Mastercard is that they don’t have any insurance coverage and they are not currently available for Quebec residents.
7. Tangerine Money-Back Credit Card
If you also have a minimum credit score of 600, the Tangerine Money-Back Credit Card is another best unsecured credit card to consider due to its competitive cashback with no annual fee.
In addition to the credit score requirement, this card also requires you to have an average individual annual income of $12,000.
Once you meet the requirements, you can apply for the Tangerine Money-Back Credit Card to enjoy a high promotional cashback of 10%.
All you need is to make a minimum purchase of $1,000 during your initial two months of cardholding to qualify for this high promo.
Also, the card has a 1.95% competitive introductory balance transfer interest which lasts for your first six months of cardholding – making it one of the best credit cards for balance transfer in Canada.
After the promo, you will earn 2% cashback on three categories with the card and pay 19.95% interest on purchase, cash advance and balance transfers.
Moreover, the Tangerine Money-Back Credit Card comes with Purchase Assurance, Extended Warranty and Mastercard Zero Liability.
That said, if you have $60,000 individual annual income or $100,000 household income, you can apply for the Tangerine World Mastercard to access exclusive benefits without an annual fee.
- Tangerine Money-Back Credit Card Review
- Tangerine World Mastercard Review
- Tangerine World Mastercard vs Money-Back Credit Card Comparison
8. Simplii Financial Cashback Visa Card
Finally, Simplii Financial Cashback Visa Card could be your best unsecured credit card for rebuilding credit in Canada.
This is a no-fee cashback credit card with a 19.99% purchase interest. It offers a competitive promotional cashback of 10% for your first four months of card holding. All you need is to make eligible purchases of $500 to qualify for the offer.
In addition, the Simplii Cashback Visa Card welcomes new members with a 9.99% introductory APR on purchase for their first 6 months of membership.
What I also like about this card is that it offers free ATM access, travel medical insurance, Purchase Security and Extended Protection.
Learn more: Simplii Financial Cash Back Visa Card Review
Best Prepaid Cards to Rebuild Your Credit Score
Depending on your situation, a secured or unsecured credit card may not meet your needs for rebuilding credit. For example, you may decide to avoid credit cards to prevent further debts.
That’s where a prepaid card comes in. A prepaid card is a reloadable card that operates only with funds you deposit in your account. This means no upfront credit and no credit check.
While a prepaid card doesn’t report your transactions to credit bureaus, it helps you avoid credit card debt and maintain a good credit utilization ratio on your main credit card.
The following are some of the best prepaid cards to consider in Canada.
MogoCard is a reloadable prepaid card operating on the Visa network. It has a $10,000 maximum balance with no monthly fees, no annual fees, and no interest on purchase.
When you make purchases with the MogoCard, you will get one free carbon-sucking tree planted on your behalf to help reduce carbon emissions.
In addition, MogoCard allows you to make free direct deposits, free Interac e-Transfers, and free POS transactions in Canada.
The interesting part is that the MogoCard offers you free access to your Equifax credit score and credit report in one dashboard.
10. Koho Prepaid Card
KOHO Prepaid Card is a no-fee card with a $40,000 maximum balance. In addition to 1.2% interest on your balance, the card offers 0.5% cashback on your purchases.
When you make purchases with the card, you can choose to roundup your purchases to the nearest dollar and save using the KOHO RoundUp feature.
However, if you are not concerned about paying a $9 monthly fee, you can consider the KOHO Premium Card which has more advanced benefits than the KOHO Prepaid Card. This includes:
- 2% cashback on eligible purchases
- Price matching
- Financial coaching
- Free foreign currency transactions
Even though the prepaid cards don’t report to credit bureaus and can’t improve your credit score, they offer you access to KOHO Credit Builder.
Through this program, KOHO requires you to pay $7 monthly fees for six months. The fee will cover the cost of depositing a line of credit in your account which KOHO will deduct monthly and report the activity to credit bureaus.
This will help you enjoy the features of a prepaid credit card and a standard credit card at once.
11. Stack Prepaid Mastercard
The last but not the least best prepaid card on this list is the Stack Prepaid Mastercard. This is a no-fee prepaid card with a $20,000 maximum balance.
Like the above prepaid cards, the Stack Prepaid Mastercard has no purchase interest and transfer fees. The card offers cashback on domestic and international purchases including international ATM withdrawals and FX purchases.
In addition, the card automatically rounds up your purchases to the nearest dollar and saves it to your account.
If you share your bills with a partner, friend, or family member, you can easily split the bills through your Stack account.
Learn more: Best Credit Card Offers in Canada
Additional Ways You Can Rebuild Your Credit Score in Canada
Rebuilding your credit score is an all-encompassing task. While a credit card can help you see significant results, taking extra measures will help you see fast and long-term results.
Below are five additional ways you can also rebuild your credit score in Canada.
1. Avoid Late Payments
Don’t miss a payment deadline. Your credit history accounts for up to 35% of your credit score so an history of late payments will put a big dent on your credit.
If you’re having trouble keeping up with all the bills, consider setting up automatic bill payments to ensure that the funds are automatically withdrawn from your account.
2. Maintain a Good Credit Utilization Ratio
Your credit utilization ratio affects your credit scoring by 30%. If you are maxing out your credit cards, it can take a toll on your credit score.
It’s recommended you keep your credit utilization ratio below 30%. However, you can increase your utilization ratio by requesting a higher credit limit and paying your balance as at when due.
3. Have a Mix of Credit
Your credit mix contributes 10% to your credit scoring as it shows lenders your ability to manage different credit. This makes it essential to have a combination of different credits ranging from revolving and installment loans.
However, this doesn’t mean you should take on many credits that you can’t afford to pay back. Stick to the combination that suits your financial situation and income level.
4. Limit Hard Inquiries on Your Credit
Before executing any financial deal, it’s essential you ask about the credit check type which can be either a soft or hard inquiry. You don’t have a problem with soft inquiries because they don’t impact your credit.
However, hard inquiries impact your credit scoring by 10%. Fortunately, you can easily avoid them by not applying for many loans, credit cards or other financial products at once.
5. Check Your Credit Score and Report Regularly
Finally, checking your credit score and report regularly is one of the customized ways of rebuilding your credit score fast.
Checking your credit score and report is an easy and cheap credit rebuilding strategy as you can do so for free using one of the free credit score and report apps in Canada.
By checking your credit score and report regularly, you can easily identify things you need to do to rebuild your credit score.
- 7 Surefire Ways to Improve Your Credit Score Fast!
- How Credit Scores are Calculated and How To Interpret Them
- Best Credit Monitoring Services in Canada
Final Thoughts on the Best Credit Cards to Rebuild Credit
Rebuilding your credit score is worth doing if you’re looking to access better rates on financial products.
The above are some of the current best secured, unsecured and prepaid credit cards that will help you rebuild your credit score in Canada.
While using any of these cards requires some discipline and patience, you are likely to see fast results by applying the tips discussed.
Which card to choose? The choice is yours to make as you can’t make the wrong selection with any of them.
But if you need more clarification about the best credit cards to rebuild credit score, kindly let me know in the comment section below