How to build your credit from scratch as a Canadian immigrant

When you land in Canada, your credit history doesn't come with you. It doesn't matter how responsibly you managed debt back home. Canadian lenders, landlords, and even some employers will see a blank file.

The fastest way to start building credit from scratch? Get a secured credit card, use it for small recurring purchases, and pay the balance in full every month. With six to 12 months of consistent on-time payments, you can have have a usable credit score.

Richard Goyder, chief credit risk officer at Neo Financial, has lived this. "I had a perfectly good credit rating back home in the U.K., and when I moved to Canada, I had no credit rating at all. I was married to a Canadian, so I could rely on my wife's credit rating, but I had none of my own," he explains.

Going from no score to a good score

Canada's two national credit bureaus, Equifax and TransUnion®, each keep a file on you once a lender first requests your report.

"Once the first attempt to pull a credit file that doesn't exist occurs, that credit file gets created. Now, the person does have a credit report, but not a credit score," says Equifax’s Head of Consumer Advocacy and Compliance, Julie Kuzmic.

Canadian credit scores range from 300 to 900. A score of 300 isn't your starting point as a newcomer—that number is reserved for people with a documented history of missed payments and defaults. If you use credit responsibly from day one, your first calculated score should land well above the floor.

"If the person has been paying on time each month, then I believe that it would typically start quite a bit higher than 300, which is the lowest possible score that can be calculated," Kuzmic explains. 

Your score is shaped by five main factors:

• Payment history
• Credit utilization ratio, or how much of your credit limit you use
• Length of credit history
• Types of credit
• Recent credit inquiries

Because the length of your history matters, credit-building takes time. "If you open up a secured card with Neo and use it sensibly, you can improve your credit score. But because a large part of what goes into your credit score is the history, it takes some time," Goyder says.

---

From our sponsor

---

Why your foreign credit history usually doesn't transfer

Canadian credit bureaus don't pull data from bureaus in other countries. A company called Nova Credit offers a product called Credit Passport that translates international credit files for participating lenders, but adoption across the industry remains limited.

"What Nova Credit does is it gives banks and issuers access to people's foreign credit bureau. Neo does not use it and I don't think many Canadian lenders use it," says Goyder. For most newcomers, the practical reality is simple: you'll need to build a Canadian credit file from zero.

A step-by-step plan to build credit from scratch

1. Get a Social Insurance Number (SIN)

You need a SIN to open credit accounts in Canada. Apply online or in person at a Service Canada Centre.

2. Open a chequing account

A chequing account (like Neo Chequing) won't generate a credit score on its own, but it establishes a relationship with a financial institution and gives you a place to manage bill payments.

3. Apply for a secured credit card

A secured credit card requires a refundable security deposit¹, and your credit limit typically starts off being equal to your deposit amount. With the Secured Neo Mastercard, you can get started with a security deposit of as low as $50. Your payment activity gets reported to the credit bureaus, establishing your credit history over time.

4. Use the card for small, recurring expenses

Put groceries or a streaming subscription on the card and pay the full statement balance before the due date every month. Keep your usage below 30% of your limit—remember credit utilization is one of the five factors that contributes to your credit score.

5. Avoid the interest trap

Richard Goyder warns newcomers against a common pitfall: taking a high-interest car loan just to build credit.

"The biggest mistake new immigrants can make when trying to build their credit history is accepting a very high interest rate loan. They're much better off getting a secured card, using it and making regular payments. It will be far more effective than having a single loan that could end up costing you thousands in interest," he said.

6. Get a cell phone plan on a postpaid contract

Most major Canadian telecom companies report payment activity to the credit bureaus. A plan under $60 per month keeps costs manageable while adding another tradeline to your file.

7. Consider rent reporting

Services like Borrowell's Rent Advantage can report your monthly rent payments to Equifax, adding another positive data point to your history.

How to verify your progress

Not every payment you make gets reported to the bureaus, so checking your file is essential. Julie Kuzmic from Equifax Canada explains, "The most important part of building credit is making sure that your positive payment history is being reported to the credit bureaus and the reality is that not all credit or bill payments are reported to credit bureaus. One way to make sure you are making progress is to take a look at your credit reports at both Equifax and TransUnion, which you can do for free."

You can access your credit reports from both Equifax and TransUnion for free online. You can also monitor your TransUnion score² through the Neo app with the Neo Build membership.