Many with bad credit cards scores know how hard life can be. Poor credit history will make it a lot harder, among other important things, for you to get a loan for a car, a lease for an apartment, or a mortgage for your home. In spite of that, poor credit is not the end of the world. You can reconstruct it, but only by using the correct method. You can both develop a limited history and dramatically boost poor ratings, thanks to quite a few Canadian card providers. To find out more, read on.
How do you fix a poor credit score?
There is, more or less, no better option than using your credit cards in the correct manner to recover a mediocre or bad credit score. Note, according to GreedyRates, payment history makes up 35% of the overall credit score. [1] In comparison, credit usage plays a significant role which makes up another 30% of the score. This ensures that you can also get a much higher score if you get less credit. Credit cards that have a higher cap on them often restrict the use of credit.
Secured Credit Cards vs. Guaranteed Credit Cards
If you have a poor enough credit score, signing up for your usual credit cards is very difficult or even unlikely. However, if anything else fails, you should still get guaranteed or protected credit cards.
A customer would have to put in a security deposit[2], which typically amounts to the cumulative credit balance of one such card, to start using a protected credit card. [2] How much money you need to put down can be from $200 to $1000 before you can use protected credit cards, but it can also be much higher. Then, you can have your deposit back to you in full after you pay off your balance or loan.
There is a strong probability that you can apply for a guaranteed credit card if none else is open to you. [3] Better yet, a large percentage of firms can only supply you with a test to see if you are eligible, instead of a rough investigation taking your credit score down lower.
Best Cards in Canada for Bad Credit
1. BMO Secured Credit Card
A MasterCard that you can reload is provided by BMO. The security deposit will range from $100 to $10,000 on these cards, which is the same amount of credit you’ll have at your service. [4] You will just need to wait a few minutes online to register for this card. Payments are just $6.95 for a whole year of service, while sales have no interest cost.
2. Home Trust Secured Credit Card
The security deposit is in the range of $500 to $10,000 on a Home Trust backed credit card and it equals the full credit cap. [5] Additional deposits will, however, further expand this cap. If you want the 19.99 percent APR, there are no recurring payments linked to this card, or you will spend $59 a year for a lower APR of 14.9 percent.
3. Refresh Financial Guaranteed Credit Card
A guaranteed credit card is provided by Refresh Financial, but anyone who wants to apply has to meet a few specific criteria. That is, you must have a Canadian ID, an open bank account, and a monthly minimum wage. [6] With that said, before you are accepted, Refresh Financial will not do a credit search. The size of the credit limit depends on the amount of the security deposit you make, as in most firms, but the range starts at $200 and extends up to $10,000. Finally, 17.99 percent of the APR comes out and takes with it a $12.95 premium charged monthly.
4. Capital One Guaranteed Credit Card
Having a fixed capital credit card requires a lot of extra steps than you would expect. [7] For instance, you must be of lawful age and not be the beneficiary of any Capital One credit cards for your province or jurisdiction. In comparison, in the year previous to applying, you could not have had a badly-standing account or attempted to sign up for a Capital One card more than once in the last month.
Based on their financial background, Capital One has both unsecured and insured credit cards to sell prospective clients. In comparison, credit caps will be anywhere from $300 to $7,000 and come with a $59 annual premium and an APR of 19.8 percent.
[1] https://www.greedyrates.ca/blog/your-credit-the-basics/
[2] https://refreshfinancial.ca/blog/credit-tips-and-tricks/unsecured-vs-secured-credit-card-differences/
[3] https://www.ratesupermarket.ca/credit_cards/guaranteed
[4] https://creditcardgenius.ca/blog/prepaid-credit-cards-canada/#prepaid-mastercards
[5] https://www.hometrust.ca/credit-cards/secured-visa-card/
[6] https://www.lifeoncredit.ca/refresh-financial-secured-credit-card/
[7] https://www.greedyrates.ca/blog/top-credit-cards-for-bad-credit-canada-unsecured-secured-credit-card/
