Best credit cards for people with no credit

Best credit cards for no credit

Best for secured card with a low interest rate: Refresh Financial Secured Card

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17.99%
Purchase Interest Rate

$12.95
Annual Fee

N/A
Min. Recommended Credit Score

Build up your credit score and control your monthly spending with the Refresh Financial Secured Card. With a monthly fee of $3 and an annual fee of $12.95, you can focus on rebuilding your credit score while getting access to a monthly credit limit between $200 - $10,000.

Card details

• Details
• Pros and cons

Annual Fee	$12.95
Min. Credit Score	N/A
Purchase Interest Rate	17.99%
Interest Free Period	Up to 21 days
Foreign Transaction Fee	3.5%

Pros

• No credit check is reequired for approval.
• This secured card offers an interest rate of 17.99%, which is typically lower than most cards offered in Canada.
• With a secured card, you're offered the chance to work on improving your credit score. Timely repayments will be reported to the credit bureau, which means you can improve your score over time.
• Your monthly credit limit is determined by the amount of your security deposit, keeping you in control of your card. Credit limits start from a minimum of $200 to a maximum of $10,000.
• You get access to free educational financial training on their online portal called Refresh f.i.t.
• Receive $100 per successful referral after the person you referred has signed up and made their first payment.

What to watch out for

• If you don't pay your balance in full by the end of the month, you'll be charged a 17.99% interest rate.
• If you don't use your card within the month, you'll be charged a $2 inactivity fee.
• The $3 monthly fee combined with the $12.95 yearly fee can really add up.

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Best for secured card with a low minimum security deposit: Capital One Guaranteed Secured Mastercard

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19.8%
Purchase Interest Rate

$59
Annual Fee

N/A
Min. Recommended Credit Score

The Capital One Guaranteed Secured Mastercard is guaranteed if you meet basic qualification requirements such as being the age of majority, in good standing with Capital One and not having an existing Capital One credit card. You’ll have to submit at least the minimum security deposit of $75, and the amount you deposit becomes your available card balance.

Applying for the Capital One Guaranteed Secured Mastercard is quick and easy. Because Capital One regularly reports to the credit bureaus, using your card regularly and paying off the balance before interest accrues will help improve your credit score.

Card details

• Details
• Pros and cons

Annual Fee	$59
Min. Credit Score	N/A
Purchase Interest Rate	19.8%
Cash Advance Rate	21.9%

Pros

• Enjoy an interest rate of 19.8% on your everyday purchases.
• You’ll be approved for this card if you meet basic criteria such as being the age of majority in your province or territory, being in good standing with Capital One, not having an existing Capital One credit card and being able to submit a minimum security deposit.
• You can use this card with a deposit as small as $75.
• Enjoy protection from unauthorized use of your card with Mastercard Zero Liability protection.

What to watch out for

• This card comes with an annual fee of $59.
• Because this is a secured credit card, the amount you can spend is limited to what you can load onto the card up to a maximum of $2,500.
• The Capital One Guaranteed Secured Mastercard doesn’t offer rewards points or cash back on your purchases.

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How to get a credit card with no credit

To get a credit card with no credit:

• Look for a card that’s open to those in your financial circumstances. This typically means a secured card. Don’t count on getting a card that’s stacked with features, as these usually require strong credit.
• Check the requirements. Depending on the type of card, you may need to supply a security deposit that can range from $75 to hundreds of dollars.
• Apply for the card. Have information on hand like your contact details, Social Insurance Number (SIN) and total annual income. You may also need to provide banking information.

How to build good credit

If you have no credit history, follow these steps to start building it:

• Decide on a credit account.
  Compare different types of credit accounts that can help you start accumulating data on your credit report. You can open a credit card, for example, or get a credit-builder loan.
• Compare lenders or issuers.
  Make sure your lender reports to Canada’s major credit bureaus: Equifax and TransUnion. Your credit will build over time as lenders pass on details of your payment history and responsible spending habits. This is important because lenders often pull credit reports from just one bureau when making approval decisions, so you want to make sure your credit is getting reported to all the major bureaus.
• Make payments consistently.
  Once you’re approved for a credit account, make your payments on time and keep your account in good standing. This will ensure your lender reports positive activity to the credit bureaus. After about 6 months of credit activity, you’ll get a credit score.

The aim is to eventually build a good credit score of 660 or higher. This gives you the opportunity to apply for more valuable credit cards and get better interest rates on loans. There are 4 types of credit-building credit cards that are especially useful if you’re just starting out.

How to choose a credit card for no credit

When you’re looking for the right credit card for no credit, you’ll want to ask yourself a few questions to narrow down your choices:

• Do you have a Social Insurance Number (SIN)? If you’re an immigrant to Canada, check to see if you need a SIN to apply for any card your interested in getting.
• Are you still in school? There are a variety of credit cards designed for students. These are often preferable options if you qualify for them.
• Do you need a business card? You’ll find a few no-credit options designed specifically for businesses.
• Do you intend on carrying a balance? If so, you’ll want to choose a card with a low APR. It’s also wise to look for a card with low fees just in case you’re worried about missing payments in the early months.

You might see an unsecured card and jump at the chance to apply. But a closer look at its fee table may reveal extremely high fees and interest rates.

Bottom line

If you have no credit, your credit card options will be limited. But there are a number of great options for Canadian cardholders. As you make card payments on time, you’ll steadily build your credit score. With a strong score, you can apply for better credit cards, including ones with rewards and valuable travel perks.

Frequently asked questions

• What's the difference between a secured and unsecured credit card?

  Secured credit cards are designed for those who don’t have a proven history of borrowing and repaying money. Card issuers offset this risk with extra requirements like making a security deposit. Unsecured (regular) credit cards don’t require a deposit and often come with perks and add-ons like cash back, rewards points and travel miles. If you have a really strong credit score, you may even be able to get a card with a really low interest rate or extra special perks.

• Can I get a good credit score simply by making payments on time?

  Making payments on time and in full is a big part of your score, but it’s not everything. You can also help your score by keeping your card balance low, keeping your card account open for a long time, opening other types of credit accounts and applying for new credit products sparingly.

• Why do I need to build my credit?

  If you have no credit, it means you have no credit report showing a history of borrowing money and repaying it.

  A credit history is important because it’s similar to a report card. It’s something lenders can use to judge how reliable of a borrower you are. If you have no credit, you’re a question mark to lenders, and they’ll be more hesitant to accept you as a customer. This could impact your ability to qualify for mortgages, car loans, credit cards, personal loans and lines of credit.

  You can check your credit score through one of Canada’s 2 major credit bureaus: Equifax and TransUnion.

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