In this guide
At Moses Advisory Group, our Licensed Insolvency Trustees have helped thousands of Canadians rebuild their credit after bankruptcy.
In this guide, we explain how bankruptcy affects your credit and show you step-by-step how to get a credit card after discharge.
How long after bankruptcy can I get a credit card?
You can apply for a secured credit card immediately after discharge from bankruptcy. However, you will likely be denied a regular unsecured credit card for 1 to 2 years.
An unsecured card immediately is highly unlikely because your bankruptcy shows on your credit report, and you don’t have a recent history of on-time payments, because the accounts you did have were included in the bankruptcy.
In Canada, a first bankruptcy appears on your credit report for 6–7 years after discharge, depending on the credit bureau and your province.
Source: Financial Consumer Agency of Canada – How Long Information Stays on Your Credit Report
Credit card companies check your credit report for evidence that you repay credit reliably, including payment history, employment, income, debt-to-credit ratio, and debt-to-income ratio.
To overcome these barriers, you must establish new lines of credit and demonstrate responsible repayment. This creates a chicken-and-egg scenario, but secured credit cards solve this problem.
Types of credit cards after bankruptcy
A secured credit card helps rebuild credit by using a refundable deposit as your credit limit, with payments reported to the credit bureaus. Being an authorized user on another person’s card can also improve your credit score. Prepaid cards don’t help with credit. Once your credit has improved enough, you can get an unsecured card.
A prepaid card is not the same thing, and it won’t rebuild your credit. Prepaid cards don’t report to the bureaus, so the good habits don’t count toward your score.
Being added as an authorized user on someone else’s card can help. Their on-time history supports your credit, and your record doesn’t drag theirs down. Once your credit has recovered, you can move to an unsecured card with no deposit. A debit card works fine alongside any of these for day-to-day spending.
Secured credit card
A secured credit card is the best option for rebuilding credit after bankruptcy. The only difference from a regular credit card is that you pay a security deposit that serves as your credit limit.
For example, if you deposit $500, you receive a $500 credit limit. Some cards accept deposits as low as $50.
Purchases are not deducted from your deposit. You pay your bill monthly as you would with a regular credit card. Interest is charged if you carry a balance.
Secured credit card activity is reported to credit bureaus, helping you rebuild your credit. On-time payments improve your credit score, while late payments damage it.
Once your credit improves, you become eligible for a standard unsecured credit card. You can then pay off the balance on the secured card in full, and your security deposit will be refunded.
Prepaid credit card
A prepaid card is not the same thing, and it won’t rebuild your credit because they do not report to the credit bureaus. A prepaid credit card lets you deposit money onto the card and spend the balance. Once the funds are spent, you must add more funds. There is usually a fee to reload the card.
Authorized user on someone else’s credit card
A friend or family member can add you as an authorized user to their credit card. Their positive payment history helps repair your credit, and your poor credit history will not damage theirs. The primary cardholder is liable for the account, so there must be trust between both parties.
Unsecured credit card
When your credit improves, you can apply for an unsecured credit card, which does not require a deposit.
If your bankruptcy is recent, you’ll likely be offered a card with low limits and a higher interest rate. A higher credit score allows you to access better credit card offers over time.
Debit card
Okay, a debit card isn’t a credit card, but it’s a simple but effective way to pay and manage your money.
Money is withdrawn from your bank account immediately, helping you stay within your means. We recommend using a debit card alongside a secured or unsecured credit card.
Best secured credit cards for rebuilding credit after bankruptcy
Selecting the right secured credit card can significantly impact your credit recovery. These three cards accept discharged bankruptcy applicants and report to both Equifax Canada and TransUnion.
| Card | Minimum Deposit | Annual Fee | Interest Rate | Best For |
|---|---|---|---|---|
| Home Trust Secured Visa | $500 | $0 or $59 | 14.90%–19.99% | Lowest rate |
| Capital One Guaranteed Secured Mastercard | $75 | $59 | 21.9%–29.9% | Easiest approval |
| Neo Secured Mastercard | $50 | $0 card fee plus $7.99/month | 19.99%–29.99% | Cash back rewards |
Home Trust Secured Visa
The Home Trust Secured Visa has the lowest rate of the three. You pay no annual fee at 19.99%, or a $59 fee to drop the rate to 14.90%. The deposit starts at $500, with a maximum credit limit of $10,000.
- $0 annual fee (19.99% interest) or $59 annual fee (14.90% interest – lowest rate available)
- Minimum deposit of $500, maximum credit limit of $10,000
- Reports monthly to both Equifax and TransUnion
- Security deposit earns interest and is CDIC-insured
- Includes rare benefits like purchase protection and extended warranty
- Not available in Quebec
Learn more about Home Trust Secured Visa
Capital One Guaranteed Secured Mastercard
The Capital One Guaranteed Secured Mastercard is the easiest to get approved for. It offers guaranteed approval for people discharged from bankruptcy or a consumer proposal, takes a deposit of $75, carries a $59 annual fee, and reports to both bureaus.
- Minimum deposit of just $75: Canada’s most accessible entry point
- Guaranteed approval for discharged bankrupts and consumer proposals
- $59 annual fee with 21.9%–29.9% interest rate
- Credit limit starts at $300 but can increase to $2,500
- Reports to both TransUnion and Equifax
- Includes travel accident, baggage delay, rental car, extended warranty and purchase protection
- Available in all provinces, including Quebec
Learn more about the Capital One Guaranteed Secured Mastercard
Neo Secured Mastercard
The Neo Secured Mastercard is the one for rewards. The deposit starts at $50, you can earn cash back at partner stores, and there’s no card fee, though the credit-building membership costs $7.99 a month.
- Minimum deposit of just $50 (Canada’s lowest)
- Up to 5% cash back at partner retailers
- $0 card fee plus $7.99/month for credit-building tools
- 19.99%–29.99% interest rate
- Credit limit up to $10,000
- Reports to both Equifax and TransUnion
- Instant virtual card access for immediate credit building
- Available in Quebec with a credit check
Learn more about the Neo Secured Mastercard
Tips for getting a credit card after bankruptcy
1. Check your credit report first
Before applying for any credit, get a free copy of your credit report from Equifax or TransUnion.
Your credit report records how you use credit products, such as credit cards and loans, including amounts owed, missed payments, and any bankruptcy information.
2. Report and correct any errors
An accurate credit report is essential for rebuilding credit.
Once you have been discharged from bankruptcy, unsecured debts should no longer appear as owed. If any errors appear, notify the credit bureaus immediately and provide a copy of your discharge certificate.
If you need advice, speak to your Licensed Insolvency Trustee.
3. Pay all bills on time
Paying bills on time is the single most important factor in rebuilding your credit. Payment history accounts for approximately 35% of your total credit score calculation.
Source: Equifax Canada – How Are Credit Scores Calculated?
If you miss a payment or pay late (over 30 days past the billing date), your lender will notify the credit bureau, and the late payment will damage your credit rating.
Set up automatic payments to ensure you never miss a due date.
4. Keep your credit utilization low
Your credit utilization ratio (the percentage of your used credit compared to your total credit limit) has the second biggest impact on your credit score.
Aim to use less than 30% of your available credit. For example, if you have a $500 credit card, keep your balance below $150.
Ways to improve your credit utilization:
- Pay more than the minimum monthly payment
- Accept offers to increase your credit card limit
- Spread a high balance across multiple lines of credit
- Add additional lines of credit to increase your total available credit
Does this work after a consumer proposal?
Yes. The same secured cards rebuild your credit after a consumer proposal. The approach is the same. Make small purchases, paid off in full, every month.
Get advice about bankruptcy from a Licensed Insolvency Trustee
A Licensed Insolvency Trustee can explain how a bankruptcy or a consumer proposal affects your credit and how to rebuild once you’re through it. The first consultation is free, by video, phone or in person.
Frequently asked questions
Can I get a credit card right after bankruptcy?
Yes, a secured credit card. You can apply as soon as you’re discharged. An unsecured card usually has to wait one to two years, until you’ve built a new payment history.
How long after bankruptcy can I get an unsecured credit card?
Usually one to two years of steady on-time payments on a secured card. Lenders want to see a positive track record before they offer unsecured credit.
How much deposit do I need for a secured card?
It depends on the card. Deposits start as low as $50 to $75 on some cards and $500 on others, and your deposit usually sets your credit limit.
Does a secured card really rebuild credit?
Yes, so long as it reports to Equifax and TransUnion. A prepaid card does not, because it doesn’t report to the bureaus.
Will applying hurt my credit score?
A single application has a small, short-lived effect. The bigger picture is the on-time payments you make afterward, which do far more to rebuild your score than one application costs it.
