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A newcomer to Canada, at the airport, wondering if they can use their homeland credit score in Canada.

The Get

True or False: Your credit score follows you to Canada

For this week’s Reality Cheque column, we’re looking at how credit scores work for newcomers to Canada.

By Ian Portsmouth

Life as a newcomer to Canada will be full of surprises. No matter how much research you do before your move, nothing will prepare you for your first encounter with poutine—a gooey combination of hot gravy, cheese curds and french fries—or the way Canadians mix metric measurements (for outdoor temperatures and driving distances) with Imperial (for baking and building). But here’s another surprise: discovering that your credit file remains in your home country and can’t be transferred to Canada. It’s even more shocking to learn that without a credit score in Canada, you could struggle to borrow money, to secure a place to live, and even to find a job.

Here’s why your foreign credit file might be useless in Canada and how to get a good credit score as quickly as possible when you’re new to the Great White North (a.k.a. Canada).

Why do newcomers need a credit score in Canada?

In Canada, credit plays a key role in daily life, whether you’re borrowing money to buy a home, signing up for a mobile phone plan, applying for an apartment to rent, or even applying for certain jobs. Credit is the amount of money a lender is willing to let you borrow, a decision based on the lender’s confidence in your ability to repay that debt. The more creditworthy you look on paper, the more credit you’ll likely receive. (Credit also refers to situations in which a business will give you a product or service before you’ve paid for it.)

To assess your creditworthiness, most organizations rely on two credit reporting agencies (also known as credit bureaus), which track the borrowing and repayment activity of millions of people and assign individual credit scores based on your activities and behaviours. A credit score is a number, ranging from 300 to 900. The higher the score, the more creditworthy you are to most lenders, and the more options you have (including lower interest rates).

If the concept is new to you, that’s fair. “Many newcomers to Canada don’t understand how important credit is in this country,” says Bruce Sellery, CEO of Credit Canada, a non-profit organization that helps people manage their debt. “They might not even be familiar with the concept of credit, because they come from a place where credit isn’t really a thing.”

Why it’s hard for newcomers to get credit in Canada

Canadian credit bureaus obtain most of their information from Canadian lenders and creditors, so they’re unlikely to know anything about you when you arrive in Canada. This domestic focus applies to most consumer credit systems around the world, actually. In their words, you’re “credit invisible,” which means they have no way to calculate your credit score because they don’t have enough of your credit history. Without knowing anything about you, credit agencies can’t report your credit score to any banks, utility providers, mobile phone companies or any other businesses you might need to deal with.

Without that information, most organizations will avoid giving you credit, whether it’s in the form of a credit card or furniture you can take home now and pay for later. It might even stop someone from giving you a job, particularly a role that requires financial responsibility or security clearance.

The “credit visibility” of newcomers is slowly improving, thanks to recent efforts to make foreign credit files easier to access. In 2023, for instance, California-based Nova Credit launched a service allowing Canadian businesses to obtain credit reports and scores for immigrants from nearly 20 countries, including Brazil, India, the Philippines, U.K. and U.S. And in 2024, Equifax, one of Canada’s two major credit bureaus, rolled out commercial access to consumer credit information from Brazil, India and the U.S. According to an Equifax spokesperson, the company expects to add the Philippines, Spain, the U.K. and some South American countries in 2026.

However, neither of these services have been widely adopted by Canadian businesses and they are not meant to replace a made-in-Canada credit file.

It takes a while to build a Canadian credit history and credit file

No matter which country you come from, you’ll likely need to build a domestic credit file from scratch. And the sooner you do that, the better.

A Statistics Canada study published in 2023 found that nearly 15% of newcomers remained credit invisible two years after their arrival. Even if you make a concerted effort to build your credit file, it will probably take at least a year to achieve the credit score you want, according to credit bureau TransUnion.

How to build credit as quickly as possible in Canada

Sellery’s advice might be another surprise: don’t fear credit; embrace it. “Every newcomer wants to start off on the right foot but to some people that means avoiding credit, because too much credit could lead to too much debt,” he says. Although that’s true, the inverse also applies: “You need to participate in the credit market so that you can access all the things you’ll eventually need.”

Here are the steps to launching a credit history in Canada to help you eventually get a good credit score.

Open a bank account

The first task on your credit-building checklist is to open a bank account. Having a bank account won’t affect your credit score, but it will play a central role in sending payments to your creditors. Sellery recommends choosing an institution “with a high-profile commitment to newcomers.” That means it “is more likely to bend over backward to serve you.” Indeed, many banks have special offers for newcomers.

Apply for a secured credit card (and use it wisely)

Your next task: Obtain a credit card from a Canadian company. Here’s why. Assuming you use a credit card regularly, you’ll be required to make a minimum monthly payment by a given deadline. Your credit card company will report every payment you make to at least one of the two major credit bureaus (Equifax and TransUnion), and that payment will be noted in your credit history. That’s crucial, because 35% of your credit score is based on your credit history. (You’ll find more on factors that determine your credit score below.) Whether the payments required are $10 or $1,000 doesn’t matter; if you pay the minimum on time, it will benefit your credit score. That said, paying more than the minimum is recommended to reduce interest costs and avoid accumulating debt.

Although a good credit score is required to obtain most credit cards, some cards are available without a credit file. A popular credit card for newcomers is a secured card, which requires you to pay a deposit equal to the credit limit of the card. This set-up “secures” the credit-card company against non-payment. Depending on the card, your deposit could be as little as $50 or as much as $10,000. Even though the credit card company holds your deposit, you’re still expected to make minimum payments every month, just like you would with an unsecured credit card. And that’s just fine, because the payments still go onto your credit report. Some financial institutions offer secured credit products that are specifically designed to help newcomers and other credit-invisible consumers build their credit files.

Get a phone plan

You can also build credit with your mobile phone plan. Most wireless service providers will open accounts for newcomers without a credit file and report your monthly payment activity to a credit bureau. So it’s a good idea to obtain a cellphone early in your Canadian residency. Just be sure you can afford the cellphone plan and any other services, such as internet and television, that you sign up for. And don’t forget to pay the bill each month. (Find out the best time to buy a cellphone in Canada.)

Get your rent reported to the credit bureaus, if you can

Another regular payment that could appear in your credit file is the monthly rent where you live, if you’re renting. Most landlords will check your credit report before renting a unit to you. Only some of them, however, will report your monthly rent payment to a credit bureau. If they don’t, you can subscribe to rent reporting services from companies such as FrontLobby and Borrowell for just a few dollars a month. As with credit cards and mobile phone plans, every on-time payment will count toward a higher credit score.

What’s in your credit report, and why it matters

As you’re building your Canadian credit file, be sure to check your credit report frequently for your latest credit score. That can be done on many banking apps or by creating accounts with TransUnion and Equifax. Your credit report will provide details of your credit activity in each of the five main areas that are used to calculate credit scores:

Your payment history: This accounts for 35% of your score, and includes on-time and missed payments.
Credit utilization: This is the amount of debt you have relative to your total credit limit. Higher utilization detracts from your credit score, but you won’t be penalized if your utilization is under 30%. Credit utilization accounts for 30% of your credit score.
Credit history: This looks at the average age of your credit accounts in Canada. The older they are, the more creditworthy you’ll seem, so keep your accounts open even if you don’t use them. Credit history accounts for 15% of your credit score.
Credit mix: Organizations believe that the more types of credit a borrower responsibly manages (e.g., a credit card, mortgage, auto loan and personal line of credit), the more trustworthy they are. This accounts for 10% of your credit score.
Credit inquiries: When an organization requests your credit report from Equifax or TransUnion—also known as a credit check—it counts as an “inquiry,” which can drop your credit score. “Soft inquiries” are made for background purposes like evaluating you for employment or an apartment rental and have no impact on your credit score. On the other hand, “hard inquiries” are part of the credit application process. Several hard inquiries in a short period of time may suggest you’re applying for new credit due to financial trouble and will lower your credit score. This also accounts for 10% of your score.

Fortunately, checking your credit profile in Canada is easy and costs nothing, although premium services (think: credit monitoring, identity protection, and other tools) are available for a fee. You can request your free monthly credit report directly from Equifax or TransUnion or obtain it through intermediaries such as Borrowell, Credit Karma and, in most cases, your own bank or fintech, like Neo Financial.

Just beware that a universal, standardized evaluation of your creditworthiness does not exist here. In fact, Equifax and TransUnion each determine your credit score and present your credit report in their own unique way; they don’t even use all the same sources of credit data. As a result, the difference between the credit score each agency gives you can be striking.

For a full picture of your creditworthiness, be sure to review your credit reports from both bureaus. And report any mistakes right away (they can happen) or activity that doesn’t seem related to you, which could be a sign of fraud. You don’t want any surprises when you’re applying for credit.

Ian Portsmouth is an award-winning writer and editor specializing in business and personal finance. He is based in Toronto.