How credit works in Canada: a newcomer’s guide

Updated November 2026 · 6-minute read

In Canada, your credit history affects whether you can get a credit card, a car loan or a mortgage, and many landlords check it too. Newcomers usually arrive with none, even after years of good credit at home. Here’s how the system works and how to start building your history.

Credit reports and credit scores

Your credit report is the record of how you’ve used credit: your accounts, balances and whether you paid on time.
Two credit bureaus keep these reports in Canada: Equifax and TransUnion.1
Your credit score is a number based on that report. Scores usually range from 300 to 900, and higher is better.1
Checking your own report or score doesn’t lower it.1

Why newcomers start from zero

Your credit history from another country usually doesn’t follow you to Canada. Some banks accept foreign credit reports, but only from a handful of countries: when BMO launched its partnership with Nova Credit in 2024, it covered 9 countries.6

You’re not alone. In a 2025 survey of newcomers in their first five years, 92% said building Canadian credit is important, 79% said it’s difficult, and 27% had trouble securing housing.5

What affects your score

Each bureau and lender uses its own formula, but the same habits matter everywhere:1 2

Paying on time. This is the most important part of your score.
How much of your limit you use. Try to use less than 30% of your total credit limit, even if you pay in full each month.
How long you’ve had credit. Older accounts help, so keep your first card open if it has no annual fee.
How often you apply. Many applications close together can lower your score.
Debts in collections, insolvency or bankruptcy hurt your score the most.

Five ways to start building credit

Open a bank account first. Banks must open a basic account for you when you show acceptable ID, such as a foreign passport plus a second document.4 Lenders like to see a relationship with you.
Get your first credit card. Many banks offer newcomer credit cards. If you’re declined, a secured card, where a deposit sets your limit, is a common way to start.
Use it a little, every month. Put a small regular bill on the card, like your phone plan, and pay the full balance on time. Set up automatic payments so you never miss one.
Keep your balance low. On a $1,000 limit, try to keep the balance under $300.2
Apply only when you need to. Space out new applications. When you shop around for a car loan or mortgage, quotes from different lenders within 2 weeks count as one inquiry.2

Check your credit report for free

You can get your credit report free online from both Equifax and TransUnion, or ask for it by mail or phone. Equifax gives you your score free everywhere in Canada; TransUnion’s score is free in Quebec and Ontario.3 Check both reports a few months after you start using credit, and make sure every account is yours.

Mistakes to avoid

Missing a payment because a bill went to an old address or email.
Maxing out a small starter card, even if you pay it off later.
Closing your first card once you get a better one.
Applying for several cards in the same month.