Shop Canada's Best Credit Cards for No Credit
Credit Cards for No Credit
A credit score is the number given to you to reflect your responsibility as a borrower. The major credit bureaus in Canada, Equifax Canada and TransUnion Canada, look at your credit file and determine your credit risk based on your past performance. For instance, if you have had a credit card for 20 years, made at least your minimum payments, always made monthly payments on time, and have never had a collections agency come after you, then chances are you have excellent credit. But if you've never borrowed any money, then you have no credit history, and this can make it difficult to get a credit card. However, it's not impossible to qualify for a credit card even when you have no payment history, and here you'll learn how you can do it and the best cards to apply for.
Getting a Credit Card When You Have No Credit Score
Individual credit histories from the last seven years are used to determine credit scores, and that means if you haven't borrowed money in the last seven years, then you won’t have a credit score. Having no credit can make it as difficult—if not more so—to qualify for a credit card than if you had a bad score since no credit means you're a complete mystery.
However, you will be glad to hear that you can still qualify for a credit card when you don't have any credit, and certain card options are ideal for people who are lacking credit reports. But if you do want to qualify, there are some conditions a card issuer will likely want you to meet, including that you have a job or can prove steady income. It's also essential that you take steps now to build your credit, which you can do by:
- Applying for a credit card for people with no credit
- Getting a co-signer to vouch for you or become an authorized user on somebody else’s card if you can't get approved alone
- Using your credit card regularly to build a payment history
- Making all your payments on time
- Never using more than 30% of your available credit limit
- Not allowing any bills to go to collections
It will take about six months of regular credit activity for you to start building a credit score, and as long as you stick with these good habits, then you'll be on your way to building a good score in no time.
Credit Card Options for the Credit-Less Borrower
There are several types of credit cards suited for people with no credit, and they include:
Prepaid cards: Prepaid credit cards are ones that you have to load money onto before you can use them. Prepaid cards aren't great for building or rebuilding your credit, but they're a viable option if you need a credit card and don’t qualify otherwise. Some prepaid cards include the RBC Visa Gift Card, the RBC Prepaid Business Card, the CIBC Air Canada AC conversion Visa Prepaid Card, and the BMO Prepaid Travel MasterCard.
Secured cards: Most credit cards that you're probably familiar with are known as unsecured credit cards, meaning you don’t have to pay a security deposit to use them. Secured credit cards, on the other hand, do require a security deposit, usually one that equals the card’s credit limit. These are easier to get if you have no credit because the card issuer will use the security deposit if you don’t pay your balance. Examples of these include:
- DCU Visa Platinum Secured Credit Card
- No-Fee Scotiabank Value VISA Card
- Peoples Trust Secured MasterCard
- Home Trust Secured Visa Card
- Vancity enviro Secured Visa
- RBC Visa Classic Low Rate
- Refresh Financial Secured Visa
Student cards: Students are younger than other adults and in different financial circumstances, so a lot of them find themselves struggling with no credit. Lenders are aware of this, which is why some of them offer credit cards specifically for students, such as the BMO SPC CashBack MasterCard and SPC AIR MILES MasterCard.
Low-interest cards: With a low-interest card, you might pay 8.99 percent instead of 19.99 percent, but these cards often come with an annual fee. These cards often have lower credit limits as well, making them less risky options for lenders to approve for borrowers with no credit. A few options in this category that you can explore will include:
- BMO Preferred Rate MasterCard
- CIBC Select Visa
- RBC Classic Low Rate Visa
- Scotiabank Value Visa
- Home Trust Secured Visa
Store cards: Store cards are issued by individual retailers, such as Best Buy, who offer their own credit cards to customers. These cards can sometimes be a good option for people with no credit, and if you apply, you'll be eligible for exclusive offers, promotions, and deals that aren't available to other customers.
Credit Cards for No Credit: Which Ones to Apply for?
Card issuers and financial institutions don’t advertise what credit score you need to get approved for a certain card, and this can make it tough when you want to apply with no credit. Luckily, you can use shoptherate.ca to compare hundreds of credit cards and filter the cards by different types (such as prepaid or secured), which will make it much easier for you to apply for the cards that you're most likely qualified for as a borrower with no credit.
One of the most important factors a potential lender will consider when you apply for a credit card is your credit score, but that doesn’t mean you'll never qualify when you don’t have a credit score. Although no credit can make it more difficult to get a credit card, as long as you know what types of cards to apply for, then you can still be eligible. The best card types for people with no credit include secured, prepaid, student, store, and low-interest cards, but it’s also in your best interest to build your credit history now so you can work toward a good credit score and be eligible for better cards in the future.