Building Credit in Canada: A Newcomer's Guide
This article is for informational purposes only and does not constitute financial advice. Please consult a qualified financial advisor for personalized guidance.
Moving to Canada is an exciting milestone, but establishing yourself financially can feel daunting—especially when it comes to building credit. Your credit history is the foundation for accessing essential financial products like loans, credit cards, mortgages, and even rental properties.
This guide walks you through building credit in Canada clearly and easily, from understanding the system to actionable steps for financial success.
Understanding the Canadian Credit System
Your creditworthiness in Canada is tracked by two credit bureaus: Equifax Canada and TransUnion Canada. They compile your borrowing and repayment history into your credit report and calculate your credit score.
How Credit Scores Work in Canada
Scores range from 300 to 900:
| Score Range | Rating | What It Means |
|---|---|---|
| 800-900 | Excellent | Best rates and premium products |
| 725-799 | Very Good | Strong approval odds for most products |
| 660-724 | Good | Approved for most standard financial products |
| 600-659 | Fair | Limited options and higher interest rates |
| 300-599 | Poor | Difficult to obtain credit; secured products only |
Most lenders prefer scores above 660; premium products often require 700+.
Why Building Credit Is Essential for Newcomers
Good credit means:
- Better credit-card approvals and lower rates
- Auto-loan eligibility
- Mortgage opportunities
- Easier rental approvals
- Lower insurance premiums
- Access to business loans
Your Step-by-Step Credit-Building Strategy
Step 1: Establish Banking Relationships
Open chequing and savings accounts with a major Canadian bank offering newcomer packages.
| Bank | Program | Key Benefits |
|---|---|---|
| RBC | Newcomer Program | Fee waivers, no Canadian credit history needed |
| TD | New to Canada | Attractive newcomer accounts and perks |
| Scotiabank | StartRight | Foreign credit transfer (select Latin-American bureaus) |
| BMO | NewStart | First-year fee waivers |
| CIBC | Welcome to Canada | No-fee international transfers |
Step 2: Apply for a Secured Credit Card
A secured card requires a refundable deposit and reports your payments to credit bureaus.
Recommended Secured Cards
-
Home Trust Secured Visa
- No annual fee at 19.99% APR or $59 annual fee at 14.90% APR, minimum $500 deposit
- Option to re-apply for unsecured cards as your score improves
-
Capital One Guaranteed Mastercard
- Soft credit inquiry, $59 annual fee, $75–$300 deposit range
- 19.8% purchase rate, excellent online management
-
Plastk Secured Visa
- Focus on rebuilding credit
- Flexible deposits and credit monitoring features
Step 3: Consider Credit-Builder Loans
These specialized loans build credit and savings simultaneously.
Popular Canadian Providers
- KOHO Credit Builder (reports to bureaus for $10/month)
- Marble Boost
- Nyble Credit Builder
Step 4: Become an Authorized User
Join a trusted friend or relative's credit card as an authorized user to benefit from their positive credit history.
Step 5: Practice Responsible Credit Usage
- Keep credit utilization below 30% (ideally below 10%)
- Pay balances on time and in full
- Keep old accounts open
Example: With a $1,000 limit, keep balances under $100.
Step 6: Monitor Your Credit Regularly
Order your free reports annually from Equifax and TransUnion and dispute errors immediately.
Special Programs for Newcomers
Newcomer Banking Packages
Benefits typically include:
- First-year fee waivers
- No-fee international transfers
- Credit cards without Canadian credit history
International Credit-History Transfer
Some banks evaluate your foreign credit file:
- RBC Global Credit Connect (Nova Credit) – Select countries
- Scotiabank StartRight – Limited Latin-American bureaus
(Programs evolve; always confirm eligibility.)
Government Programs
Programs like Canada Child Benefit and GST/HST credit indirectly improve credit through financial stability.
Common Credit Mistakes to Avoid
| Mistake | Impact | Solution |
|---|---|---|
| Frequent inquiries | Lowers score | Space apps 3–6 months apart |
| Missed payments | Severe damage | Autopay bills |
| Maxed-out cards | Hurts score significantly | Keep balances below 30% |
| Closing old accounts | Shortens credit history | Maintain older accounts |
| Ignoring reports | Errors remain unchecked | Regularly check reports |
Building Credit Without Traditional Credit Cards
- Cell providers typically report only financed handsets or missed payments. Major carriers report late or defaulted wireless accounts (≥30 days) but not positive payment history. Always pay phone bills promptly.
- Canadian utilities generally do not report positive history, just collections.
- FrontLobby reports rental payments to Equifax and Landlord Credit Bureau (monthly fee applies).
- Some BNPL programs may report payments: Affirm/PayBright will begin reporting to Experian (US) starting April 1, 2025 (Canadian rollout timeline TBA), and Sezzle only reports with Sezzle Up opt-in. Most BNPL providers don't report.
Your Credit-Building Timeline
| Phase | Months | Expected Outcomes |
|---|---|---|
| Foundation | 1–3 | Bank accounts, secured cards, first positive history |
| Establishment | 3–6 | Initial score; secured products continue |
| Growth | 6–12 | Score stabilizes; unsecured credit becomes accessible |
| Optimization | 12+ | Premium products and rates become available |
Advanced Credit-Building Tactics
- Make multiple monthly payments
- Request higher credit limits after 6–12 months
- Diversify credit mix (credit card, loan, line of credit)
- Automate all payments
When to Upgrade to Unsecured Cards
After 6–12 months of responsible use:
- Student/starter cards
- Rewards cards without fees
Ensure:
- ≥6 months history
- Low credit utilization
- Zero missed payments
Protect Your Credit Future
Prevent Identity Theft
- Secure your SIN
- Use trusted networks
- Monitor weekly
Healthy Financial Habits
- Maintain a budget
- Build emergency savings
- Regularly review financial products
Take Action Today
- Open newcomer-friendly bank accounts
- Obtain a secured credit card
- Set up automatic payments
- Check your score quarterly
- Stay patient and disciplined
Your financial future in Canada starts now—build it on solid credit foundations.