The Credit Catch: Why Canada’s Credit System Puts Newcomers at a Disadvantage

When newcomers arrive in Canada, they bring with them dreams, skills, and often years of financial discipline. But there's one thing they usually leave behind — their credit history.

In most countries, personal credit scores either don’t exist or are calculated differently. Yet in Canada, a credit score is a fundamental gatekeeper. It determines whether you can rent an apartment, get a cell phone plan, finance a car, or even secure a job in some sectors. And for immigrants, this system often starts at zero — no matter how financially responsible they've been elsewhere.

What Is a Credit Score in Canada?

A credit score in Canada is a three-digit number (typically between 300 and 900) that reflects how trustworthy you are in repaying borrowed money. It's calculated by two major credit bureaus: Equifax and TransUnion. Factors include:

Payment history
Credit utilization (how much of your available credit you use)
Credit history length
Types of credit accounts
Number of recent credit checks

This number isn’t just for banks. It’s often used by landlords, utility providers, phone companies, and employers to assess risk.

The Immigrant Credit Gap

The problem? Canadian credit bureaus don’t recognize credit histories from abroad. That means even if you had a spotless financial record — repaid loans, used credit wisely, never missed a payment — you’re invisible in Canada’s credit system.

This lack of a recognized credit score can:

Limit access to housing: Many landlords require a credit report. Without one, newcomers are often forced to pay several months' rent upfront or accept substandard housing.

Make phone and internet harder to get: Providers may require large deposits or deny services outright.

Restrict borrowing options: Newcomers often can't qualify for regular credit cards or car loans, leaving them with limited or costly alternatives.

Affect job opportunities: Some employers run credit checks as part of the hiring process — particularly in finance or government.

Why the System Feels Unfair

Credit systems should reward financial responsibility. But for newcomers, Canada’s system effectively penalizes them for being new. The irony is that many immigrants come from cultures where debt is discouraged, and they arrive with savings, no liabilities, and a long track record of financial stability.

Yet here, they’re often treated like credit risks — not because they have bad credit, but because they have no credit.

What Can Newcomers Do?

While it takes time, there are steps newcomers can take to build credit in Canada:

Get a secured credit card – A bank will ask for a deposit (e.g., $500), which becomes your credit limit. Use it monthly and pay it off in full.

Become an authorized user – Ask a trusted friend or relative in Canada to add you to their credit card as an authorized user. Their good habits can help boost your score.

Apply for a small loan or credit builder product – Some institutions offer loans designed specifically to help build credit.

Pay all bills on time – While not all bills (like rent or utilities) are reported to credit bureaus, some are. Never risk a late payment.

Monitor your credit report – Check your Equifax and TransUnion reports regularly to track progress and catch any errors.

What Should Canada Do?

If Canada wants to fully tap into the economic potential of immigrants, some systemic changes are needed:

Accept international credit histories through verified financial institutions abroad.

Create a national newcomer credit program that allows financial institutions to work with immigration records and banking data to offer fairer access to credit.

Incentivize landlords and service providers to assess financial capacity more holistically, especially for recent arrivals.

Final Thoughts

Canada prides itself on welcoming immigrants — and for good reason. But when it comes to financial integration, the system is unintentionally stacked against them. By recognizing the strengths newcomers bring and adapting the credit system to be more inclusive, we can build a fairer, stronger economy for everyone.