Maintaining a good credit score is a key component of your financial well-being because it can bring many advantages, such as a wider range of loan options and lower insurance premiums. 

However, if your credit history has been bruised by a significant life event – such as a prolonged illness or job loss – or if you are new to Canada and haven’t yet established your credit history, you may find being approved for credit to rebuild or establish your score to be a challenge.

So, how do you go about mending past credit issues when you no longer qualify for credit or are looking to build a credit history? One of the most effective ways is to apply for a secured credit card, such as the Home Trust Secured Visa.

What is a secured credit card?

A secured credit card is a type of credit card that is backed – or “secured” – by collateral. This collateral is typically in the form of a cash deposit that you provide to the credit card issuer, with the credit limit often equivalent to the amount you provide. The card issuer will deduct from these funds if you fail to make regular payments.

If you’re looking to apply for a secured credit card, here are some key features to look out for.

1. Regular reporting to both credit bureaus

The main benefit of having a secured credit card is having your monthly status regularly reported to the credit bureaus to build your credit history.  In Canada, there are two credit bureaus, Equifax and TransUnion, so it pays to ask the credit card issuer whether they will regularly report your status to both of them before applying.

2. Flexible deposit range

Since your credit limit is usually set to the amount that you provide as collateral, it helps to have some flexibility when deciding how much to deposit. A larger credit limit, for example, can help you maintain a lower credit utilization ratio, which can have a significant effect on your overall credit score. On the other hand, a smaller limit can help you budget more effectively by keeping your spending in check.

The Home Trust Secured Visa offers this level of flexibility, allowing you to deposit between $500 to $10,000 as collateral. Additionally, since Home Trust is a member of the Canada Deposit Insurance Corporation, your security deposit is fully protected for added peace of mind.

3. No annual fee

According to the Financial Consumer Agency of Canada, the longer you have a credit account open and in use, “the better it is for your score.” This means that a good secured credit card used for repairing or building credit, such as the Home Trust Secured Visa, would benefit from not having an annual fee to help you keep it open longer.

4. Wide acceptance and useful benefits

Using your secured credit card keeps your account active, so it helps to have a card that is widely accepted, both when purchasing in-store and online. For instance, Visa credit cards are accepted in more than 200 countries and territories. Having a Visa credit card can also give you access to cash at over 2.5 million ATMs around the world.

Additionally, having a credit card with other useful benefits, such as no foreign transaction fees or the ability to add it to your favourite Digital Wallet, can make using it a lot more convenient. 

5. Industry recognition

Comparison sites such as RATESDOTCA can help you decide what secured credit card is right for you with their annual rankings of different product offerings. RATESDOTCA in particular uses a well-established methodology in coming up with their rankings, and in 2023 they named the Home Trust Secured Visa as the Best Secured Credit Card for Building Credit.

The Home Trust Secured Visa helps you take control of your future by allowing you to effectively build your credit score. Learn more by visiting hometrust.ca/credit-cards/secured-visa-card.

The information, materials and opinions contained in this Blog are provided for our information only. This Blog does not constitute legal, financial or other professional advice and you should not rely on it as an alternative to specific advice based on your particular circumstance. This Blog contains links to third party websites. These links are provided for information and convenience; Home Trust does not endorse the content of any third party website, and it makes no representation or warranty as to the information on such third party sites. By clicking on any link to a third party site, you leave Home Trust’s website and do so at your own risk. Home Trust disclaims all liability for any damage or loss that results from your access to or reliance on information contained in this Blog or any third party site.