Building a Credit History in Canada as a Newcomer

Arriving in Canada represents a fresh start in many ways, including financially. Regardless of your credit profile in your home country, you essentially start from zero in Canada. Canadian credit bureaus, Equifax Canada and TransUnion Canada, have no data-sharing agreements with foreign credit agencies. While this reality can feel frustrating, it is also an opportunity to build a strong file from the very beginning.

Understanding the Canadian Credit System

In Canada, your credit score is a number between 300 and 900, calculated by Equifax and TransUnion based on five main factors: payment history (35%), credit utilization (30%), account age (15%), credit mix (10%), and new credit inquiries (10%). To qualify for a mortgage with an A lender in Quebec, you will generally need a score of at least 680. Mortgage brokers certified by the Autorité des marchés financiers (AMF) use this score, combined with other criteria, to assess your eligibility.

Action Plan for Your First 24 Months

1. Upon arrival: Open a Canadian bank account: Open an account at a Canadian financial institution (major bank, Desjardins in Quebec, or credit union). Many offer newcomer packages with reduced or waived fees for the first year. Your Social Insurance Number (SIN) will be required to open the account.
2. Month 1: Obtain a newcomer credit card: Major Canadian banks (RBC, TD, BMO, Scotiabank, CIBC) offer credit cards designed specifically for newcomers, with no Canadian credit history required. Alternatively, a secured credit card is accessible to everyone. Use the card regularly and pay the full balance every single month.
3. Months 3 to 6: Set up automatic payments: Establish pre-authorized payments for your cellphone, internet, and utilities. While these payments are not always reported to credit bureaus, they demonstrate financial stability to lenders when you eventually apply for a mortgage.
4. Months 6 to 12: Diversify your credit: Add a second type of credit: a small personal loan, RRSP loan, or line of credit. Diversifying credit types accounts for 10% of your score. Avoid applying for too many products at once, as multiple hard inquiries can temporarily lower your score.
5. Months 12 to 24: Lay the groundwork for a mortgage: With a year of credit history, begin saving for your down payment. CMHC allows newcomers to access mortgage insurance with a minimum 5% down payment. Consult an AMF-certified mortgage broker to assess your eligibility and begin the pre-approval process.

Mortgage Programs for Newcomers

CMHC offers favourable provisions for new permanent residents and those who have obtained landed status. These programs allow insured mortgages with a minimum 5% down payment without requiring the same credit history as long-term residents. Participating lenders do require, however, that the borrower demonstrate a regular rent payment history since arriving in Canada, stable employment or a verifiable income source, and compliance with OSFI qualification criteria (Guideline B-20), including the qualifying rate stress test.

• Permanent residents: Eligible for CMHC newcomer programs upon arrival, with Canadian credit history as short as 12 months in some cases.
• Temporary workers: More limited eligibility; generally a 10% to 20% down payment is required along with at least 12 months of Canadian credit history.
• International students: Very limited mortgage eligibility; obtaining permanent residency first is recommended.
• Refugees: Specific programs available at certain institutions, including Desjardins in Quebec, with terms adapted to their particular circumstances.

Building credit in Canada is an investment in your financial future. By following a structured plan and working with an AMF-certified mortgage broker who understands the realities newcomers face, you can significantly accelerate your path to homeownership in Quebec. The key lies in consistent payments, patience, and using the right financial products from the start.