Short answer: With a damaged credit file in Canada you can realistically get three things: a secured credit card, where a refundable deposit sets your limit; a "guaranteed approval" unsecured card, which asks for little up front but charges a high interest rate; or a prepaid card, which is not credit at all. Only the first two are reported to Equifax Canada or TransUnion Canada, so only those two rebuild a credit file.
What follows is what each kind does to your credit report, what it costs, and which one fits which situation. Issuers appear only as examples, verified on their own pages as of October 2026.
What counts as bad credit in Canada?
Bad credit in Canada usually means a credit score under roughly 600, or a credit report carrying recent missed payments, an account in collection, a consumer proposal or a bankruptcy — whatever the number happens to say. Lenders read the report, not just the score.
According to the Financial Consumer Agency of Canada, a credit score is a three-digit number that comes from your credit report, scores usually range from 300 to 900, and there are two main credit bureaus in Canada: Equifax Canada and TransUnion Canada. Neither bureau publishes a line dividing "good" from "bad", so the cut-off a lender applies is that lender's own and not an official threshold (as of 2026).
What moves the number is well documented. Payment history carries roughly 35% of the weight, how much of your available credit you are using about 30%, the length of your history about 15%, and your credit mix and recent inquiries about 10% each. Every account on the report also carries a rating code from R1 to R9: R1 means paid as agreed, R9 means a bad debt or an account placed for collection, and a single R9 can weigh more with an underwriter than fifty points of score.
There is also a case that looks like bad credit but is not. A thin credit file is a report with too little history to score reliably — no missed payments, simply nothing to read. The fix is cheaper, so settle which one you have first; our guide to building a thin credit file sets out that path.
Which credit cards can you actually get with bad credit?
Three kinds of card are open to a damaged file: a secured credit card, a "guaranteed approval" unsecured card, and a prepaid card — and the third of those is not credit. Almost everything else on the Canadian market screens on score before it screens on anything else.
The table below compares the three on cost, cash up front, credit check and what reaches the credit bureaus.
| Kind of card | Ongoing cost | Cash up front | Credit check | What reaches the bureaus | Examples (as of October 2026) |
|---|---|---|---|---|---|
| Secured credit card | $0 to about $60 a year, or a monthly fee | Refundable deposit, typically $50 to $500 to start | Usually yes, but approval does not hinge on your score | A revolving account: limit, balance and payment record, monthly | Home Trust Secured Visa; Neo Secured Credit; AvenaCredit secured card |
| "Guaranteed approval" unsecured card | Often no annual fee, but a high purchase rate | Sometimes none, sometimes security funds | Yes, and approval still carries conditions | A revolving account, same as any other card | Capital One Guaranteed Mastercard |
| Prepaid card | $0 to a few dollars a month | Whatever you load onto it | No | Nothing — you are spending your own money | KOHO prepaid Mastercard |
A secured credit card is a real credit card whose limit is backed by a refundable deposit you place with the issuer. The deposit is not a fee and it is not spent on purchases; it sits as security and comes back when the account closes in good standing. Home Trust's own card page, checked in October 2026, puts its Secured Visa deposit at $500 to $10,000, with no annual fee at a 19.99% purchase rate or $59 a year for 14.90%, and the card unavailable to residents of Quebec. Neo Financial's secured card page says security funds can start from as little as $50 for most cards, that every payment is reported to both TransUnion and Equifax, and that income requirements apply.
A "guaranteed approval" card is an unsecured card whose issuer promises approval to anyone meeting a published set of conditions — not to everyone. Capital One's Guaranteed Mastercard page sets out four of them in October 2026: you must be the age of majority in your province or territory, have no frozen credit profile or legal bar to credit, hold no existing Capital One account or pending application, and be in good standing with the company. The card carries no annual fee and a 29.9% purchase rate, or 21.9% for Quebec residents, and the page notes you may need to provide security funds. That is a narrower promise than the phrase suggests, and what a card issuer actually checks before approving you is the more useful question.
How much of a deposit does a credit card for bad credit need?
Deposits on Canadian secured cards start between $50 and $500 depending on the issuer, and on most cards the deposit becomes your credit limit dollar for dollar. Put down $300 and you get a $300 limit.
Equifax Canada describes the mechanism plainly: a secured credit card requires a monetary deposit, and the example it gives is putting $300 of your own money onto the card, which you can then use to make purchases. Because that money is refundable, the real cost of a secured card is the fee plus the interest, not the deposit — though it is cash you cannot touch while the account stays open.
Size the deposit to what you normally spend in a month on things you would buy anyway, so groceries, gas and a phone bill fit on the card without you having to think about it. A limit too small to carry your ordinary spending is one you will keep bumping into. When the deposit comes back is covered in how long to keep a secured credit card.
AvenaCredit's secured card takes a refundable deposit of $250 to $5,000, and that deposit sets the limit — the card page sets out the deposit range and what gets reported.
Does a credit card for bad credit run a credit check?
Most secured cards do run a credit check, but approval does not turn on your score the way an ordinary card's does — and a few issuers run no credit check at all. The check and the decision are two different things.
A hard credit check is a lender pulling your full credit report in connection with an application, and it leaves a recorded inquiry behind. The Financial Consumer Agency of Canada states that credit inquiries by lenders stay on your report for 3 years with Equifax or 6 years with TransUnion. An identity check is not the same thing: it confirms you are who you say you are, usually against government ID or bank data, and it neither reads your credit history nor leaves an inquiry.
AvenaCredit's secured card sits in the second group — no credit check, only an identity check at sign-up, and no minimum score. The Starter, Build and Boost membership plans run no hard credit check either. Which Canadian issuers check, and what being declined for a secured card means, has its own article, linked above.
Which of these cards actually get reported to Equifax or TransUnion?
Secured cards and "guaranteed approval" unsecured cards are reported to the bureaus as credit accounts; prepaid cards are not reported at all. That single difference decides whether a card can rebuild a file.
A tradeline is one credit account as it appears on your credit report — the lender's name, the account type, your limit, your balance and a month-by-month payment record. The Financial Consumer Agency of Canada puts the mechanism simply: lenders send information about your credit accounts to credit bureaus. A prepaid card creates no such account, because nobody is lending you anything.
This is where prepaid products get confusing. KOHO's own page states that its card is a prepaid Mastercard rather than a credit card, and that spending on it does not normally create a traditional credit account on your credit report; its separate Credit Building subscription opens a dedicated $225 line of credit, advertised at $10 a month, and reports that line to Equifax only. So the product can build credit, but the prepaid card is not the part doing it. Which bureau a product reports to matters as much as whether it reports: a file only Equifax Canada can see is invisible to a lender who pulls TransUnion Canada.
One observation from the way our own product is built, rather than from anyone's results: when AvenaCredit opens a secured card account it is reported to Equifax Canada as a revolving tradeline and refreshed every month, and the first report appears 30 to 45 days after the first payment — not the day the card arrives. Any card taken on for credit-building purposes works on that lag, so judge it after three or four reporting cycles rather than three weeks. How a secured card builds a file month by month is set out in our guide to how secured credit cards work.
Five checks before you apply for a credit card with bad credit
Run any card through these five questions, ordered by how much damage getting them wrong does, before handing over a deposit.
- Is it reported, and to which bureau? If the account never reaches Equifax Canada or TransUnion Canada it does nothing for your credit file, whatever the marketing says. Ask which bureau, not whether.
- What is the all-in annual cost? Add the annual or monthly fee to the interest you will actually pay. A no-fee card at 29.9% costs more than a $59 card at 14.90% the moment you carry a balance.
- How much cash does it tie up, and for how long? A $500 deposit you will need back in two months is the wrong product. Deposits come back when the account closes in good standing, not on demand.
- Is it available where you live? Several Canadian secured cards exclude Quebec, Home Trust's among them as of October 2026. Check the issuer's own page rather than a comparison table.
- Can you pay it in full every month without thinking about it? Payment history is the heaviest single factor, and late payments on credit cards and loans can sit on your report for up to six years. A card you miss payments on makes a bad file worse.
If what you want is a card that reports without screening you on score, AvenaCredit's secured card is built for that case: a refundable deposit of $250 to $5,000 sets the limit, it is a Mastercard, and the account is reported to Equifax Canada every month. It costs $9.99 a month on its own, with no membership plan required, and there is no credit check — only an identity check at sign-up. As of October 2026 the card is not open yet, so you can get the card at launch from the card page rather than apply today. Use it for ordinary spending once it arrives — groceries, gas, the phone bill — because a card sitting in a drawer reports almost nothing.
Who should skip a card for bad credit
Three kinds of reader are better off not opening one of these cards yet, because a card builds a payment record and is the wrong tool when the payment record is not the problem.
If you have accounts in active collection and no room in the budget, the collection comes first; a new card with $500 of your money tied up in it does not move that. If your file is thin rather than damaged, any reported account will do and the deposit is an unnecessary step. And if you are partway through a consumer proposal or a bankruptcy, the sequence matters more than the product — rebuilding credit after a consumer proposal sets out what to do and when.
If none of that applies, pick the cheapest card that reports to a bureau you care about, then be deliberately boring with it for a year. Two things are worth reading first: the difference between a thin file and bad credit, and a secured card versus a credit builder loan, which weighs the two products doing much the same job. AvenaCredit's card is $9.99 a month on its own and is included free with the Boost plan, so it is worth a look to compare the three plans before deciding which way in fits.
Next step: If your score is the only thing between you and a card, and you would rather not be screened on it, the product that fits is a secured card with no credit check: a refundable deposit sets the limit, and the account reaches Equifax Canada every month. As of October 2026 the AvenaCredit card is pre-launch, so join the launch list on the secured card page.
Common questions
Which is the best credit card for bad credit in Canada?
There is no single best card, because the right one depends on how much cash you can tie up and which bureau you need to reach. A no-fee secured card is cheapest if you can spare the deposit; a card with no credit check suits a file you would rather not have screened.
Can I get a credit card to rebuild credit with a 500 credit score?
Yes, in most cases. A secured card does not screen heavily on score, because your deposit covers the issuer's risk, and some Canadian issuers run no credit check at all. A 500 score will usually rule out ordinary unsecured cards, so expect to put down a deposit of $50 to $500 to start.
Is a secured credit card for bad credit worth it?
It is worth it if the account is reported and you pay it in full every month, because payment history carries roughly 35% of the weight in a credit score. It is not worth it if the deposit is money you will need back soon, or if the fee and interest cost more than the improvement is worth to you.
Will applying for a credit card with bad credit lower my score?
A hard credit check can shave a few points and leaves a recorded inquiry — 3 years with Equifax Canada or 6 years with TransUnion Canada, according to the Financial Consumer Agency of Canada. Applying to several cards in a short window is the real risk. Cards that run only an identity check leave no inquiry at all.
Do prepaid cards help bad credit?
No, not on their own. A prepaid card spends money you have already loaded, so no lender reports an account and nothing reaches Equifax Canada or TransUnion Canada. Some prepaid providers sell a separate credit-building subscription that does report, but it is that subscription doing the work rather than the card.
How long does it take a card to fix bad credit?
Expect months, not weeks. A reported account first appears on an Equifax Canada file roughly 30 to 45 days after the first payment, and each month after that adds one data point to your payment history. Negative entries such as late payments can remain for up to six years regardless, as of 2026.
Sources: Financial Consumer Agency of Canada — Credit report and score basics · Financial Consumer Agency of Canada — How long information stays on your credit report · Equifax Canada — How to build credit in Canada
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