Can you get a credit card without a job in Canada?

For many Canadians, having a credit card is a way to manage their finances as they make purchases online and in-store. However, what happens when you don’t work or have a limited income? Can you still get a credit card without a job in Canada?

Generally, the short answer is yes, but it takes more than just filling out an application. Let’s explore credit card eligibility and the options available for those between jobs.

Understanding credit card eligibility in Canada

When it comes to credit cards, you must meet certain requirements to qualify. However, many factors can affect your eligibility for a credit card in Canada.

Income requirements for credit cards

In Canada, most credit cards require applicants to meet specific income criteria prior to applying. This income benchmark fluctuates and depends on the credit card issuer, as well as the specific card type one pursues. Some credit cards may stipulate an annual income as low as $12,000. Meanwhile, premium credit cards could ask for an income of $80,000 or even higher.

Importantly, for those who currently find themselves unemployed but part of a household, you have an additional option. Many Canadian credit card issuers allow you to include household income in your application. This means that even if you personally do not earn an income, you may still qualify for a credit card. This way, the credit card company looks at the total income brought into your family unit. This policy can help jobless individuals retain access to credit.

However, remember that even if you meet or exceed the income requirement, other factors screen you for credit card eligibility. The company may still reject your credit card application if you have a poor credit score or high debt-to-income ratio. 

Credit score and credit history

Your credit score and credit history also play a significant role in your credit card application. A low credit score or no credit history can reduce your chances of getting approved for a credit card.

On the other hand, if you have a good credit score and a positive credit history, we have good news. In this case, you may qualify for credit cards with lower interest rates and better rewards.

So, regularly check your credit score and credit report for errors or fraudulent activity that could negatively impact your creditworthiness.

Other factors affecting eligibility

Other factors that can affect your eligibility include your age, citizenship status and debt-to-income ratio. Anyone under 18 or a non-Canadian citizen may not qualify for certain credit cards.

Excessive debt and a low income can also hinder your ability to get approved for a credit card. Lenders want to see that you have a stable income and are able to manage your finances responsibly.

Always carefully consider your financial situation and credit history before applying for a credit card. Research different options and compare credit card features, fees and requirements to find the best fit for your needs.

Types of credit cards for those without a job

Even if you don’t have a job, you can still score some credit card options. First you need to understand the different types of credit cards and their requirements before applying.

Secured credit cards

A secured credit card is backed by a security deposit. You make a deposit to the card, which serves as collateral in case you default on your payments. Secured credit cards offer a good option for those with no credit or bad credit. The credit limit usually equals the amount of your deposit. So, you can increase your credit limit over time by making on-time payments. Now, not all secured cards report to credit bureaus, so choose one that does as you rebuild your credit history.

Student credit cards

As a post-secondary student, you may qualify for a student credit card. These cards have lower income requirements and aim to help students build their credit history. They often come with perks such as cashback rewards or discounts on textbooks. However, you must use student credit cards responsibly and avoid carrying a balance to avoid high interest charges.

Prepaid credit cards

Prepaid credit cards don’t technically equate to credit cards, but they work like them. You load money onto the card, then use it to make purchases. With prepaid credit cards, you don’t need to have a credit history, a bank account or good credit score to get one. They help you avoid overspending or give parents a way for their teens to make purchases without risking overspending. However, prepaid cards often come with fees for activation, monthly use and transactions, so read the fine print before choosing one.

Retail store credit cards

Retail store credit cards offer another option for those without a job. These cards get approved because they have lower credit score and income requirements. However, they typically have higher interest rates and fees. The best store credit cards give you a good option if you frequently shop at a particular retailer. That way, you can take advantage of discounts or rewards offered by that card. However, always use retail store credit cards responsibly and avoid overspending to avoid high interest charges and debt.

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Overall, choose a credit card that fits your financial situation and goals. Read the terms and conditions carefully before applying and use your credit card responsibly to build a positive credit history.

Alternative options for accessing credit

If you cannot get a credit card, you still have other options available to you. Certainly, explore all of your options and choose the one that best suits your financial needs and situation.

Authorized user on someone else’s credit card

You can become an authorized user on another person’s credit card account. This option helps those who have just started building credit or for those who need to rebuild their reputation. However, becoming an authorized user can impact the primary cardholder’s credit score. To get started, the cardholder must contact their bank or card issuer and request to add you to their account.

Also, set clear guidelines with the primary cardholder about how you use the credit card and who will make payments. This can help prevent any misunderstandings or disputes down the line.

Personal loans

Personal loans present another borrowing option for those without a job. You can borrow money from a lender and repay it over a fixed term with interest. Personal loans work in a variety of instances, such as paying for unexpected expenses or consolidating debt. However, this type of loan typically has higher interest rates than credit cards.

When considering a personal loan, shop around to compare interest rates and terms from different lenders. You should also make sure you understand the repayment terms and any fees associated with the loan.

Lines of credit

A line of credit offers a revolving credit account – similar to a credit card. You can borrow money up to a certain limit, but you only need to repay what you’ve borrowed. Lines of credit typically have lower interest rates than credit cards. Consequently, they make a good option for those who need to borrow money over a longer period of time.

However, you should only borrow what you can afford to repay. If not, you could easily fall into a cycle of debt and end up owing more than you can afford.

Peer-to-peer lending

Finally, you can try peer-to-peer lending. This type of lending involves borrowing money from individuals rather than traditional financial institutions. This option works for those turned down by traditional lenders or who seek a more personalized borrowing experience.

For example, with GoPeer, you can borrow up to $35,000 from fellow Canadians at eight percent or higher. It serves anyone over 18 with a credit score of at least 600 and an annual income over $15,000. You just need to hold a Canadian bank account after living in Canada for at least three years.

However, thoroughly research the lenders and their terms before borrowing any money. Make sure you understand the interest rates, repayment terms and any fees associated with the loan. With any lender, always have a plan in place for repaying the loan on time.

Building credit without a job

Even if you don’t have a job or a steady income, you can still build your credit. This important step helps you achieve financial independence and stability and it’s never too early or too late to start.

Establishing a credit history

First, you want to establish a credit history. This can challenge you if you don’t have a steady income or a job. However, you could begin by opening a secured credit card. This type of credit card requires you to make a deposit that serves as your credit limit. By using it responsibly and making timely payments, you can start building a positive credit history.

Next, you can apply for a retail store credit card, whose companies make it easier than traditional credit cards. However, stay on course by using these cards responsibly and paying your bills on time to avoid further setbacks.

Maintaining a good credit score

Once you have established a credit history, you’ll want to maintain a good score. Your credit score represents your creditworthiness and lenders use this number to determine your eligibility and interest rates.

To improve your credit score, always pay your bills on time. Late payments can negatively impact your credit score and make it more difficult to obtain credit in the future. Above all, keep your credit utilization low. This means only using a small percentage of your available credit. Aim to keep your credit utilization below 30 percent to maintain a good credit score.

Finally, avoid applying for too much credit at once. Each time you file a request, it shows up on your credit report and can negatively impact your credit score. Only apply for credit when you need it and can afford to make the payments.

Tips for responsible credit card use

If you get a card, only charge what you can afford to pay back and make your payments on time. Late payments can result in high interest rates and fees, making it more difficult to pay off your balance.

Additionally, keep track of your spending and monitor your credit card statements regularly. This will help you identify any fraudulent charges or errors so you can take action to correct them.

Getting a credit card without a job: The Bottom Line

Getting a credit card without a job in Canada can feel impossible, but you can do it. The process does require some research and planning. Consider your options and use credit responsibly to build a reputable history and maintain a good credit score. Then you can enjoy all the benefits and convenience you need!