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Credit for Newcomers

Credit for Newcomers

Credit4 min readFebruary 11, 2026
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Newcomers to Canada face a unique challenge: even with an excellent credit history in their home country, they generally start from scratch in Canada. Neither Equifax nor TransUnion transfers international credit files. A new Canadian credit file must therefore be built from the ground up. The first step involves obtaining a Social Insurance Number (SIN), opening a bank account, and applying for a secured credit card from a Canadian financial institution. Several major banks, including RBC, TD, BMO, and Scotiabank, offer newcomer-specific programs with credit cards that require no Canadian credit history. After 6 to 12 months of responsible use, a credit score can reach 650 to 680 points, a threshold generally sufficient to consider a mortgage. CMHC has established mortgage insurance programs accessible to newcomers, and certain lenders offer dedicated mortgage products. In Quebec, AMF-certified mortgage brokers are familiar with the specific options available to help newcomers on their path to homeownership. Fédéral immigration programs, particularly economic-class programs, often enable a faster transition to mortgage credit.

Building Credit in Canada as a Newcomer

Every year, Canada welcomes over 400,000 permanent residents and hundreds of thousands of temporary workers. For all these newcomers, one reality sets in immediately upon arrival: their credit history from their home country has no value in Canada. The two main credit reporting agencies, Equifax and TransUnion, do not recognize international credit histories. Whether you are arriving from France, India, the Philippines, or any other country, your credit score does not transfer. Building a solid Canadian credit file therefore becomes an essential priority, especially for those who wish to achieve homeownership in Quebec and across Canada.

Steps to Establish Your Credit File

  1. Obtain a SIN and open a bank account: As soon as you arrive, apply for your Social Insurance Number (SIN) through Service Canada. Then open a bank account at a Canadian financial institution. Several banks offer newcomer welcome packages, including no-fee accounts for the first year.
  2. Apply for a secured credit card: Deposit between $500 and $2,500 as collateral to obtain a secured credit card. This deposit becomes your credit limit. Use the card for small regular purchases (groceries, gas) and pay the balance in full every month. Your payments will be reported to credit agencies.
  3. Add supplementary credit references: After 3 to 6 months, apply for a small personal loan or a second credit card. Having multiple accounts of different types (revolving credit and installment credit) strengthens your file. Make sure all your accounts (cell phone, utilities, etc.) are in your name.
  4. Maintain responsible usage: Keep your credit utilization ratio below 30% of your available limit. Always make your payments on time. A single 30-day late payment can cause a significant drop in your score. Set up automatic payments to avoid missed due dates.
  5. Monitor your progress: Check your credit file for free with Equifax and TransUnion at least once per quarter. Promptly correct any errors. After 12 months of disciplined management, your score should be between 650 and 700 points.

Mortgage Programs for Newcomers

The Canada Mortgage and Housing Corporation (CMHC) facilitates homeownership for newcomers through its mortgage loan insurance programs. Permanent residents and valid work permit holders can obtain an insured mortgage with a down payment as low as 5%. Several major Canadian banks also offer dedicated newcomer programs with preferential terms. For example, some lenders accept a 5% down payment without Canadian credit history if the borrower arrived within the last 5 years and can provide credit references from their home country. Other lenders require a minimum of 6 to 12 months of Canadian history before considering an application. It is important to note that the Office of the Superintendent of Financial Institutions (OSFI) still requires all borrowers, newcomers included, to pass the mortgage stress test under Guideline B-20, which qualifies borrowers at the greater of the contract rate plus 2% or the benchmark qualifying rate.

Non-Traditional Credit Sources

Newcomers can also leverage non-traditional credit sources to support their mortgage application. A 12-month rent payment history (evidenced by bank statements or landlord letters), regular utility payments (Hydro-Quebec, telecommunications), and foreign credit references are supplementary elements that some lenders accept. CMHC specifically recognizes these non-traditional sources in its eligibility criteria for insured mortgages intended for newcomers. Some B-lenders (alternative lenders) are particularly receptive to these files and can offer a transitional solution while the credit file is being consolidated. In Quebec, the AMF-certified mortgage broker can identify the lender best suited to each situation and maximize approval chances by presenting a comprehensive application that includes these non-traditional references.

Mistakes to Avoid and Best Practices

  • Do not wait: open a credit product within the first few weeks of your arrival. Every month counts when building your Canadian credit history.
  • Avoid over-indebtedness: only borrow what you can repay in full each month. Credit should be used to build a file, not to finance a lifestyle beyond your means.
  • Limit credit applications: each formal application generates a hard-pull inquiry that temporarily lowers your score. Space your applications at least 3 to 6 months apart and consider using a mortgage broker who bundles lender searches into one inquiry.
  • Pay the full balance: contrary to a common myth, carrying a balance does not build better credit. Paying the full balance every month is the best strategy and saves you from paying unnecessary interest charges.
  • Check both agencies: Equifax and TransUnion do not always have the same information. Make sure your accounts are being reported to both agencies and promptly dispute any inaccuracies.
  • Keep your financial records: retain bank statements, rent payment receipts, and tax assessment notices. These documents will be valuable when you apply for a mortgage.

Frequently Asked Questions

Is my credit history from my home country recognized in Canada?
No. In Canada, credit agencies Equifax and TransUnion do not transfer international credit files. You start with a blank file and no credit score. Some alternative lenders may consider a foreign credit history as a supplementary factor, but a Canadian credit file remains mandatory for traditional lenders.
How long does it take to build a credit score sufficient for a mortgage?
Generally, it takes between 12 and 24 months of Canadian credit history to reach a score of 680 or higher, the typical threshold for a CMHC-insured mortgage. Some lenders accept files with as little as 6 months of history under their newcomer programs, provided you demonstrate stable employment and a healthy debt ratio.
What is a secured credit card and how does it work?
A secured credit card requires a security deposit (typically $500 to $2,500) that serves as your credit limit. You use it like a regular credit card, and your payments are reported to Equifax and TransUnion, which builds your credit file. After 12 to 18 months of good payments, the institution may convert the card to an unsecured card and return your deposit.
Are CMHC mortgage programs available to newcomers?
Yes. CMHC offers mortgage loan insurance to newcomers who hold permanent resident status or a valid work permit. Requirements generally include a minimum 5% down payment, stable employment in Canada, and a Canadian credit history of at least 6 to 12 months, depending on the lender. Non-traditional credit sources may also be accepted.
What are common credit mistakes made by newcomers?
The most frequent mistakes include: not opening a credit account upon arrival, using more than 30% of available credit, making only minimum payments, submitting multiple credit applications at the same time (generating several hard-pull inquiries), and not regularly checking their credit file for errors.

Educational information only. This does not constitute financial advice under the Act Respecting the Distribution of Financial Products and Services (LDPSF). Consult an AMF-certified mortgage broker before making any financial decision.

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