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Credit card options for applicants with bad credit

Looking to apply for a credit card but have a bad credit score? Here's what you need to know.

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While it is possible to get a credit card in Canada with bad credit, it can be difficult to find reasonable interest rates and fees. Credit card issuers use your credit score and the information on your credit report – as well as your income, employment and other factors – to determine your reliability as a borrower. If your credit profile indicates you have trouble repaying loans and credit, you may not be approved for a credit card.

While a bad credit score can have a negative impact on your chances of getting approved for a card – or being approved for a card with affordable rates and fees – working to improve your credit rating can help increase your chances of approval in the future.

What is my credit score?

Your credit score is a numerical representation of the information on your credit report and helps determine your borrowing power when it comes to applying for credit. There are two credit bureaus in Canada: Equifax and TransUnion. Your credit score may vary slightly between the two bureaus since their algorithms differ slightly.

Credit score meter image

What are the credit score tiers and ranges?

While not set in stone, the general credit tiers are as follows:

  • Excellent credit score: 760-900
  • Very good credit score: 725-759
  • Good credit score: 660-724
  • Fair credit score: 560-659
  • Poor credit score: 300-559

What credit products can I get with bad credit?

If you can’t get approved for a credit card with reasonable rates, you might need to consider some of the following options:.

  • Debit cards. A good way to avoid debt is to steer clear from credit and only spend what you have. Debit cards are debt-proof and widely accepted as payment. However, keep in mind that using a debit card will have zero effect on your credit report and cannot help you rebuild your credit rating.
  • Prepaid credit cards. Prepaid cards are similar to debit cards in the sense that you’re spending only what you have. Unlike a debit or credit card though, you load funds on the card before using it. These cards also don’t affect your credit rating and don’t charge interest, so they can be a good way to build up your budgeting skills. Most prepaid cards are either Visa or Mastercard, so you should be able to use them in the same places you’d use your credit or debit card.
  • Short-term loans. Also known as a payday loan, this is a loan of up to $3,000 that is usually repaid within 14 days to one year, but usually terms are around one to three months. Keep in mind these loans come with excruciatingly high interest rates and fees, so really consider how much you need it before you apply.
  • Bad credit personal loans. If you’re in need of a larger amount than a short-term loan, there are some bad credit personal loans available that can offer amounts up to $5,000 or even $10,000. These loans usually come with a flat interest rate and, if you repay responsibly, can help you rebuild your creditworthiness.

Credit card alternatives for borrowers with a bad credit rating

Name Product Interest Rate Max. Loan Amount Loan Term Fees Min. Credit Score Link
LoanConnect Personal Loan
Secured from 1.90%, Unsecured from 10.00%-46.96%
$50,000
3-60 months
No application or origination fees
N/A
Go to site
More Info
LoanConnect is an online broker that matches borrowers to lenders offering loans in amounts from $500 to $50,000. Get approved for multiple loan offers from different lenders in as little as 60 seconds with any credit score.
Loans Canada Personal Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
$50,000
3-60 months
No application or origination fees
300
Go to site
More Info
Loans Canada connects borrowers to lenders offering both secured and unsecured personal loans in amounts from $300 to $50,000. Submit one application to get rates from multiple lenders across Canada.
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%
$20,000
6 months - 5 years
None
560
Go to site
More Info
Fairstone offers unsecured personal loans up to $20,000
Mogo Personal Loan
9.90% - 47.42%
$35,000
9 months - 5 years
NSF fee - $20 - $50
540
Go to site
More Info
Mogo offers loans up to $35,000 on flexible terms.
Magical Credit Personal Loan
19.99% - 46.80%
$20,000
6 months - 5 years
A single administration fee of $194 for $1,500 loans and up
300
Go to site
More Info
Magical Credit offers unsecured personal loans in amounts up to $20,000.
Cash Money Installment Loan
46.93%
$10,000
6 months - 5 years
Vary across provinces/territories
560
Go to site
More Info
Cash Money offers installment loans up to $10,000 for AB, MB and NB residents.
LendDirect Personal Loan
19.99% - 46.93%
$15,000
No end dates
None
560
Go to site
More Info
Borrow up to $15,000, based on your income and credit history, with a personal line of credit from LendDirect.
LendingMate Personal Loan
43% (British Columbia and Ontario) and 34.90% (Quebec)
$10,000
1-5 years
None
300
Go to site
More Info
LendingMate offers loans to Canadians with poor credit with no credit checks. Co-signer required for application.
Fairstone Personal Loan (Secured)
19.99% - 23.99%
$35,000
3-10 years
Varies by province
560
Go to site
More Info
Fairstone offers secured personal loans up to $35,000.
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Next steps

Ultimately, a bad credit rating can have a big impact on your financial options, making it difficult to get a credit card, car loan, home loan or other forms of credit. Instead of looking for “bad credit” credit cards or options that involve no credit check, you can improve your chances of approval by rebuilding your credit rating and managing money responsibly.

Start by requesting a free copy of your credit report via one of the credit bureaus or online using a trustworthy credit reporting site. Once you receive a copy of your report, identify the negative listings on your file and begin to take steps to improve your credit score.

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