How to Build Credit in Canada (From Zero or After a Setback)
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A Canadian credit score runs from 300 to 900 and comes from two credit bureaus, Equifax and TransUnion. Lenders, landlords and some employers look at it. There’s no shortcut that works faster than the steps below, and anyone selling one is selling something you can do yourself for free.
What the score is built from
The bureaus don’t publish exact formulas, but the Financial Consumer Agency of Canada lists the same factors:
- Payment history, the biggest factor. Paying at least the minimum on time, every time.
- How much of your limits you use (utilization). Keeping balances under about 30% of your limits helps; under 10% helps more.
- How long you’ve had credit. Older accounts help, so think twice before closing your first card.
- Mix of credit, such as a card plus an instalment loan.
- Recent applications. Each “hard” check from a lender can lower the score a little for a while.
Step 1: Check your report (free)
Before fixing anything, see what’s there. Both bureaus give you your report free, and several apps show your score free.
Look for accounts you don’t recognize, late payments you didn’t make and wrong personal details. Errors can be disputed directly with Equifax and TransUnion at no cost.
Step 2: Get one account that reports
With no history, you need one account that reports your payments to the bureaus.
- Secured credit card. You put down a deposit (often $50 to $500) and that becomes your limit. Use it like a regular card. See our secured card guide.
- Credit-builder product. Some fintechs offer a small monthly subscription or “loan” that reports on-time payments. Check the monthly fee: over a year it can cost more than a secured card.
- Your bank’s student or newcomer card. If you qualify, this is usually the cheapest option.
Step 3: Use it lightly, pay it fully
Put one small recurring bill on the card (a phone plan or streaming service), set up an automatic full payment from your bank account, and leave it alone. After 6 to 12 months of on-time payments, most people have a usable score.
Step 4: Be patient with the past
Late payments and collections stay on your report for about six years. A consumer proposal or bankruptcy stays longer. Nothing legally removes accurate information early, but its weight fades as you add new on-time payments.
Common mistakes
- Applying for several cards at once after a denial. Each application can add a hard inquiry.
- Closing your oldest card to “clean up”. It shortens your history and lowers your total limit.
- Paying a fee for a free report or score.