3 Ways to Build Credit in Canada (2024)

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Co-authored bywikiHow Staff

Last Updated: October 11, 2022References

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   Obtain a credit card to begin building a good credit score. When you're trying to build your credit score, your first order of business should be to get a credit card. Get a card with a credit line of at least $3,000. Since you may not have a pre-existing credit score, the credit card company may want to see scanned or faxed copies of documents that show your identity, address, and place of employment (if you're currently employed).^[1]

   • Also bring a passport, Canadian driver's license, or another form of photo ID.
   • Get started applying for a credit card online with any of the major international credit card companies.
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   Opt for a department store card if you aren't approved for another type. Major credit card companies may be hesitant to offer you a line of credit if you currently have no credit score. If you find yourself in this situation, try getting a department store credit card. They're usually less picky and offer credit cards to people regardless of their credit score. Visit a major Canadian retail store like Sears or the Hudson Bay Co. and fill out a store credit card application.^[2]

   • Be wary when using these types of credit cards, though, because they have higher interest rates—sometimes as high as 18-21%.
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   Open a credit card through your bank as an alternative. If you'd prefer not to open a line of credit through a department store, your next best option is to open a card through your bank. Most banks offer credit cards to individuals who haven't yet built up a credit score. These cards may have a low spending limit, but they're a great way to start building your credit.^[3]

   • For example, check out the Scotia Bank's “Start Right” credit program or the Royal Bank's “Welcome to Canada” package.
   • You can also look into Canadian banks' starter programs. Most Canadian banks offer these programs, which allow students or newcomers to Canada to open a line of credit.
   • If you're emigrating from a country whose native language isn't English or French, ask to speak with an international representative at the bank.

   See Also

   How to Build Credit | Capital OneHow to Build Credit on a Credit Card: 13 Steps (with Pictures)How to build credit: A guide for beginners4 Ways to Build Credit Fast
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   Get a co-signer who has strong credit if you aren't approved for a card on your own. If you're having trouble getting approved for a Canadian credit card, ask a friend or a family member with a high credit score to co-sign on your card. Banks and credit-card companies will be much more likely to offer you a credit card with a co-signer, since the co-signer will be financially responsible if you fail to pay your credit card bill on time.^[4]

   • For example, if you recently turned 18 and are trying to build credit on your own, ask 1 or both of your parents or guardians to co-sign.
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   Put cash down to open a secured credit card. This is another great way to get a credit card without a credit score. You can open a secured credit card through most credit card companies. Secured cards are open to people with no or low credit, and require you to put down a certain monetary deposit. This deposit amount then becomes your credit card spending limit.^[5]

   • For example, if you open a line of credit that's secured for $4,000, you will have up to a $4,000 credit limit. If you fail to pay the bill, the company will hang onto your cash deposit.
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   Use your credit card frequently to build your credit score. The best way to quickly build credit is through using your credit card as often as possible. Instead of paying for things with cash or a check, use your credit card. That said, be careful to track your spending so that you don't end up over-spending and racking up more money in credit card debt than you have in the bank.^[6]

   • If you're moving to Canada with a spouse or partner, make sure that each of you take out a credit card in your own name. That will allow each of you to build your own independent credit score.
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   Pay off the balance on your credit card every month. When the bill for your credit card comes at the end of the month, pay off the full amount. If you only pay the minimum, your developing credit score will suffer. Paying your full bill monthly will demonstrate to the card company—and to credit bureaus—that you're financially responsible. As a result, your credit score will increase.^[7]

   • If you'd rather not have to remember to make monthly payments, set up auto-pay through the card company's website. Auto-pay lets you schedule recurring payments that will be taken from your bank account on a specific day of each month.
   • If you can't afford to pay off the full balance, pay off at least half of your available limit. For example, if you have a $3,000 limit and have a $2,000 bill, pay at least $1,500 towards the bill.

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   Open a cell phone account through a Canadian provider. Most major cell companies will offer a post-paid plan, meaning that you'll pay in monthly installments after signing up and receiving the phone. The cell company will report your payment history to Canadian credit bureaus, which will increase your credit score as months go by. Be sure to always pay the cell bill in full!

   • Don't opt for a pre-paid cell phone plan, since it will do nothing for your credit score if you pay in advance.
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   Put utility bills in your name and pay them off monthly. If you're renting a property, talk to the managing company and ask if you can have utility bills put in your name, instead of having the fees included as part of your monthly rent. Then, just like when you pay off your credit card and cell-phone bills, aim to fully pay your utility bills every month. The utility companies will report this to Canadian credit bureaus, and your overall credit will increase with time.

   • For example, put the water bill, electric bill, and internet bills in your name. If you're living with a spouse or partner, you could put 1 or 2 of the bills under each of your names.
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   Apply for a credit-builder loan to increase your credit score. Most Canadian banks offer credit-builder loans, which are designed to enhance the credit score of the loan holders. These loans typically don't give you money up front, but require monthly payment and eventually provide you with a government investment certificate (GIC). Your monthly payments will increase your score with credit bureaus, and after 12 or 18 months, you'll own the GIC.^[8]

   • Once you own the GIC, it will return a guaranteed rate of return over a previously-determined period of time; for example, 24 months.
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   Diversify your credit report by using several means to build credit. Diversifying your credit report is an important trick to use when trying to build credit quickly. So, instead of relying on only 1 method to build credit (e.g., a credit card), build credit in a variety of ways. Try having 2 credit cards, a bank account, a credit-building loan, and a cell-phone contract.^[9]

   • Credit bureaus will see credit diversification as an indication that you're financially trustworthy across a variety of fields. As a result, your credit score will increase quickly.

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   Open at least 1 new account at a global bank. Most region-specific banks only store currency for their account holders in a single country. Global banks, on the other hand, allow you to open accounts that can be accessed internationally. It's a good idea to open an account of at least $5,000 USD in a global bank 6 months to a year before moving to Canada. This way, you'll start building your Canadian credit score before moving to Canada.^[10]

   • Global banks to investigate include Goldman Sachs, JPMorgan Chase, and Morgan Stanley. Banks of this stature likely also have counterparts or branches in Canada.
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   Pay off your bills, debts, and outstanding payments before emigrating. To start with a blank financial slate in Canada and build credit quickly, it's important that you not have any outstanding debts or bills in the country that you're moving from. If credit agencies find out that you've dodged a debt or left utility or credit-card bills unpaid in your home country, it will have a negative impact on your developing Canadian credit.^[11]

   • The 2 main Canadian credit bureaus—TransUnion and Equifax—track credit in the United States and many other western countries.
   • So, if either bureau is aware that debt-collectors have tracked you down before you moved to Canada, it will negatively impact your Canadian score.
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   Ask your bank and credit-card provider to transfer your credit score. This will only be possible if you've built up credit in a country other than Canada. While it's not always possible to transfer your existing credit score over to the Canadian credit system, there are exceptions. Speak to someone in international banking (or even customer service) at your local bank or current credit card company, and ask if there's a way to transfer your credit score.^[12]

   • Since credit scores are tracked and maintained by credit bureaus, not banks themselves, your bank or card company won't be able to transfer your credit score themselves. But, they can reach out to their Canadian counterparts and find out if a transfer is possible.

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