Best Credit Cards for Building Your Credit in Canada

The smart Canadian's guide to credit building cards

Building credit in Canada can feel like trying to solve a puzzle with missing pieces. You need credit to get credit, but how do you start when you have none?

The good news is that several Canadian financial institutions have created innovative solutions specifically designed to help you establish and strengthen your credit profile.

Let's explore the most effective credit building cards available to Canadians today.

Why building credit matters more than ever in Canada

Whether you're dreaming of homeownership, planning to finance that perfect car, or simply want access to better financial products, a solid credit history opens doors that cash alone cannot.

1. KOHO Prepaid Mastercard

KOHO Credit Builder is a feature that helps you build or rebuild your credit history through a secure line of credit that reports your payment activity to Equifax.

A line of credit is a set amount of money you can borrow from and repay over time. In this case, it's a $225 credit that helps build your credit history.

KOHO members have seen their credit scores go up by an average of 31+ points in just 4 months¹.

You can get even more:

• Earn up to 4% Interest

• Earn up to 2% Cash Back

• International Money Transfer is always fast and secure with no hidden markups or other-worldly fees

• Get up to $250 interest-free right when you need it

• Pay off purchases up to $1,000 in monthly instalments

• Get your Equifax credit report and credit score

2. Secured Neo Mastercard

This card offers the benefits of both a secured and unsecured credit card.

Monthly Fee: $5

Interest Rate:

• Purchase rate: 19.99% – 29.99% (QC: 19.99% – 24.99%)

• Cash advance rate: 22.99% – 31.99% (QC: 22.99% – 25.99%)

Minimum Security Deposit: $50

Card Limit: $50 – $10,000

Card Requirement:

• Must be the age of majority in your province or territory of residence

• Must be a Canadian resident

• Must provide security funds

3. Home Trust Secured Visa

This card can help people take control of their future by helping them build their credit.

Monthly Fee: $0 or $59

Interest Rate:

• Purchase rate: 19.99% with no annual fees, or 14.90% with $59 annual fee

• Cash advance rate: Low-rate option: 19.80%; no annual fee option: 19.99%

Minimum Security Deposit: $500

Card Limit: $500 – $10,000

Card Requirement:

• Must be the age of majority in your province or territory of residence

• Must be a Canadian resident (excluding Quebec)

• Must have a source of income

• Cannot currently be in bankruptcy

Strategic tips for maximizing your credit building journey

1. Choose the Right Starting Point: If you're completely new to credit, KOHO might be your best bet.

2. Keep Utilization Low: Aim to use less than 30% of your available credit limit. This single factor can significantly impact your credit score improvement timeline.

3. Set Up Automated Payments: Payment history is the most crucial factor in your credit score. Automation eliminates the risk of human error.

4. Monitor Your Progress: Take advantage of free credit score monitoring offered by many of these providers to track your improvement.

When to expect results

Most positive credit building activities take 3-6 months to significantly impact your score.

Avoiding common credit building pitfalls

Resist the urge to apply for multiple cards simultaneously. Each application creates a hard inquiry, potentially lowering your score.

The minimum payment trap

While making minimum payments keeps you in good standing, paying your full balance monthly demonstrates superior financial management and avoids interest charges.

The closing old accounts mistake

Keep old credit accounts open even after you qualify for better cards. The length of your credit history positively impacts your score.

Your next steps to credit success

Building credit in Canada doesn't have to be a mysterious process.

Remember, your credit building journey is a marathon, not a sprint.

Choose the card that best fits your current situation, use it responsibly, and watch as doors begin to open in your financial life. The investment in building strong credit today will pay dividends for decades to come.

¹ Based on users with a starting score of 500 or less and who signed up for credit building in October 2024. Credit Building is not a credit repair tool and does not guarantee an improvement in credit score. Credit scores are based on complex models involving a variety of factors. Consistent on-time payments help improve scores and missed or late payments may cause credit scores to decrease. Outcomes may vary among users.