Smart Finance Tips for Improving Your Credit Score in Canada with Credit Cards

While you might think it takes good credit to get credit, this idea is not the whole story. A more accurate view would be that it takes good credit to get good credit terms. However, with the right strategy you can use credit to improve your credit score and be on your way to establishing good credit that will get you more favorable credit terms in the future.

One way to speed up the process of improving your credit score is to show that you can use credit responsibly. Avoid the randomness of applying for just any credit card by focusing on credit cards designed to help you improve or build your credit score. Such products that are perfect for such a strategy include unsecured credit cards, secured credit cards, and guaranteed credit cards.

Image of credit score meter with credit card as the base

Generally, it is easy to obtain a secured credit card because you bear the majority of the risk. Your credit limit is secured by a cash deposit minus any administration fees charged by the credit card issuer. On the other hand, if you meet the prescribed criteria, you may qualify for a guaranteed credit card. Unlike a secured credit card, the credit card issuer shares more of the risk by issuing you a credit card in which the credit limit is only partially secured by a cash deposit. In both cases, as you use the card and make timely payments, the credit card issuer reports your activity to the major credit reporting agencies, Equifax Canada and TransUnion Canada.

Due to the prevalence of individuals with challenging credit scores, credit card issuers are offering unsecured credit cards with special approval criteria for individuals with credit problems. By engaging in positive credit card activity such as paying your bill on time and not exceeding your credit limit, you can expect that over time these behaviors will contribute to a positive credit score.

Consider the following credit card options best suited to improve your credit score:

Credit CardAnnual FeeMinimum
Deposit
APROther Details
Home Trust (No fee) Secured Visa$0$50019.99%A $12 fee may apply for 12 months of inactivity. A lower APR of 14.99% is available for a $59 annual fee.
CapitalOne Low Rate Guaranteed Mastercard®$79$0*14.99% – 19.99%Guaranteed approval and 14.99% APR on balance transfers. The card offers travel accident, car rental, and baggage delay insurance as well as travel assistance.
*If you do not qualify, you may be issued a secured card which requires a security deposit.
No Fee Scotiabank Value® Visa Card$0$016.99%No credit history is required if you are new to Canada. Minimum credit limit is $500. Car rental benefits are available at AVIS.
Best Credit Cards Improving Credit Scores

Regardless of the type of credit card you choose, remember that these credit options are a vehicle to rebuild your credit score – not a permanent tool in your financial tool chest. Use it wisely and you improve the likelihood of qualifying for credit of any type with lower rates and better features. With these tips, you can demonstrate the ability to make better financial decisions that will result in the reward of a favorable credit score and a financial profile that will earn you better credit terms to make your financial goals a reality.

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