How to Fix Bad Credit in Canada: Complete 2026 Guide

Fixing bad credit in Canada is a systematic process, not a quick fix. There are no legitimate shortcuts — any company promising to "erase" your credit history overnight is either lying to you or doing something illegal. What works is a disciplined multi-step approach that adds positive data while allowing time to fade negative items.

Step 1: Know What You're Working With

Before you can fix your credit, you need to see exactly what's on your report. Pull both bureaus for free:

• Equifax Canada: borrowell.com (free weekly score and full report)
• TransUnion Canada: creditkarma.ca (free weekly score and full report)

On each report, note: late payments and their dates, collection accounts, the balance vs. limit on each card, hard inquiries, any accounts you don't recognize.

Step 2: Dispute Errors

Errors are surprisingly common on Canadian credit reports. Look specifically for:

• Accounts that don't belong to you (possible identity theft or bureau mix-up)
• Correct accounts with incorrect payment history (showing late when you paid on time)
• Debts that are beyond the 6-7 year reporting limit but still appearing
• Duplicate entries for the same account
• Wrong balances or credit limits

File disputes online at equifax.ca (select "Credit File Dispute") and transunion.ca. You can also dispute by mail with supporting documentation. The bureau has 30 days to investigate and respond. Successful dispute of even one major negative item can jump your score 20-50 points.

Step 3: Stop All New Damage

While you're rebuilding, halt all new negative activity:

• Set autopay for the minimum on every account — no more missed payments
• Don't apply for any new credit that isn't part of your rebuilding strategy (no new hard inquiries)
• Contact creditors proactively if you're struggling — many will work out hardship payment plans before sending accounts to collections

Step 4: Add Positive Credit Data

Option A: KOHO Credit Building

The simplest entry point for rebuilding. KOHO's Credit Building feature (from $7/month, or free with KOHO Extra) requires no credit check and reports your monthly payment to Equifax Canada. Every month you stay subscribed, another positive payment appears on your Equifax file. There's no risk of getting into more debt — you're not borrowing anything.

Option B: Secured Credit Card

Deposit $200-$500 with a bank or credit union; that amount becomes your credit limit. Use the card for one or two small recurring charges (like a streaming service), pay it off in full every month, and keep the balance under $50 (under 10% utilization). After 6-12 months, this builds genuine revolving credit history at both Equifax and TransUnion.

Option C: Credit Builder Loan

Some Canadian credit unions offer credit builder loans where the loan amount is held in a savings account until you repay it. Each monthly payment is reported to the bureau, building installment credit history. The "loan" amount becomes yours when fully paid. It's a structured way to build both savings and credit simultaneously.

What Not to Do

• Don't pay "credit repair" companies: Any company claiming to remove accurate negative information from your Canadian credit file is either misleading you or acting illegally. No one can legally remove accurate negative data before its reporting period expires.
• Don't close your existing cards: Even with bad credit, keeping old accounts open maintains your available credit and credit history.
• Don't apply for multiple credit products simultaneously: Multiple hard inquiries signal desperation to lenders and further harm your score.