When I first moved to Canada, I had no idea how important a credit score was. I thought it only mattered if you wanted a loan or a credit card. But I was wrong.
One of my biggest surprises came when me and my husband were trying to rent our first home. The landlord asked for a credit check to see if we were the reliable tenants. Luckily, my credit score wasn’t too bad because I had started building it early with a basic credit card. But that moment made me realize how crucial credit is in Canada, even beyond money matters.
Why Credit Score Matter in Canada?
Your credit score in Canada is more than just a number, it reflects how reliable you are with managing money. For newcomers, understanding and building credit early can make a huge difference in daily life.
A good score doesn’t just help with loans, it can make everyday things easier, like setting up a phone plan without paying a big deposit or getting approved for a rental like my case. Over time, strong credit can help you save money through better interest rates and easier approvals. In some jobs, especially in finance or government, employers might even look at your credit history. So even if you’re just settling in, learning how credit works is a smart and empowering step.
Step 1: Understand How Credit Score Work in Canada
In Canada, your credit score usually ranges from 300 to 900. The higher your score, the better your chances of getting approved for loans, credit cards, and even housing. Generally, a score above 700 is considered good and can lead to better financial opportunities, such as lower interest rates and higher approval chances.
Your credit score is made up of several key factors and understanding each one can help you build a strong score over time, especially as a newcomer to Canada.
1. Always Pay Your Bills On Time
This is the most important factor that affects your credit score. It shows whether you pay your bills on time. Even a single missed or late payment can hurt your score. To build a strong credit history, always aim to pay your full balance by the due date. This not only improves your credit score but also helps you avoid costly interest charges. Setting up automatic payments or reminders can help you stay on track.
2. Don’t Use Too Much of Your Credit Limit
Try to use less than 30% of your credit limit. For example, if your credit limit is $1,000, aim to spend no more than $300. This is called your credit utilization rate, and keeping it low shows lenders that you can manage credit wisely without relying on it too much. If you often spend close to or over your limit, even if you pay it off, it can still hurt your credit score.
3. Keep Your Credit Cards Open Longer
The longer you’ve had a credit account open, the better it is for your credit score. That’s why it’s often a good idea to keep your oldest credit cards open, even if you rarely use them. A long credit history gives lenders more data to trust your financial habits.
4. Use Different Types of Credit (If Needed)
Having different types of credit, such as a credit card, car loan, or line of credit, can help improve your credit score. It shows that you can manage different forms of credit responsibly. However, don’t take on new credit just for variety. Focus on what you truly need.
5. Don’t Apply for Too Many Cards at Once
Each time you apply for a new credit card or loan, it affects your credit score a little. Too many applications at once can hurt your score, so space them out and only apply when needed.
Step 2: Open a Bank Account and Apply for a Newcomer Credit Card
Look for newcomer banking packages that include credit cards, even with no credit history. Some great options include:
- Simplii Financial Cash Back Visa (as mentioned in my other post — New to Canada? First 5 Financial Steps for Newcomers (2025))
- Scotiabank Scene+ Visa for Newcomers
- RBC Avion Visa for Newcomers
- CIBC Aventura® Visa with Welcome to Canada Bundle
Many of these don’t require Canadian credit history and have no annual fee. I personally started with Simplii Financial because it was simple, online, and I’m loving the perks:
- 8% cash back on eligible restaurants, cafés, and bars for the first 3 months (up to $80 bonus)
- Then 4% cash back on dining, 1.5% on groceries, gas, and drugstores, and 0.5% on everything else
- No annual fee, which is great if you’re just starting to build credit
Want an Extra Bonus?
If you open a Simplii account using my referral link, you could get up to $430 in rewards, including a $50 referral bonus, $300 for setting up direct deposit, and up to $80 cash back on dining in your first 3 months. Easy wins while getting your finances set up!
Step 3: Use Your Credit Card Regularly and Responsibly
Once you’ve secured your first credit card in Canada, it’s essential to use it regularly and responsibly to build your credit score. Regular usage demonstrates to lenders that you can manage credit effectively.
Start by making small purchases, such as groceries or utility bills, and pay off the balance in full each month. This habit not only helps you avoid interest charges but also positively impacts your payment history, a significant factor in your credit score.
Remember, consistency is key. Even if you’re using the card for minor expenses, regular, on-time payments contribute to a healthy credit profile.
Step 4: Monitor Your Credit Score Regularly
Checking your credit score regularly is one of the easiest ways to stay on top of your finances. It helps you see how you’re doing and spot any mistakes or weird activity early.
In Canada, you can get your credit report for free from Equifax and TransUnion once a year. But if you want to check your credit score more often, there are easier ways.
For example, some Canadian banks now show your credit score right in their app or online banking. RBC, BMO, and CIBC are a few banks that offer this feature, making it super convenient to check your score without signing up for a separate service.
Another great option I personally recommend is Borrowell. It’s a free Canadian service that lets you check your credit score as often as you like, without affecting it. Borrowell also gives helpful insights and personalized tips to improve your score over time, based on your actual credit data.
👉 You can sign up for Borrowell here to check your credit score for free anytime.
By checking your score regularly, you’ll stay motivated, catch errors early, and make sure your efforts are actually working. Whether it’s through your bank or Borrowell, make it a habit to check in every month or two. It only takes a minute, and it’s totally worth it.
Step 5: Be Patient and Stay Consistent
Building a strong credit score doesn’t happen overnight. Every month you manage your credit wisely, you’re proving to lenders that you’re financially responsible. While making the minimum payment is better than missing a payment, paying your full balance on time is even more powerful. It helps keep your credit score healthy and saves you from paying interest charges.
Additionally, even if you don’t use your credit card often, try to keep your accounts open. The length of your credit history positively affects your credit score. Closing old accounts can shorten your credit history and potentially lower your score. So, keep your cards active by using them occasionally and paying off the balance in full.
Summary: Start Building Your Credit Score Today
Your credit score is one of the most important financial tools you have in Canada. It affects everything from renting a home and getting phone plans to applying for loans and even some jobs. Remember, building a good credit score takes time, patience, and smart habits.
By understanding how credit scores work, checking your score regularly, applying for a starter credit card, using your card wisely, and paying your balance in full while keeping your accounts open, you’re setting yourself up for financial success.
If you haven’t already, start by checking your credit score for free with Borrowell. Taking these steps now will open doors to better financial opportunities and peace of mind as you settle into life in Canada.
Note: This post contains referral links. If you use them, I may receive a small commission, at no cost to you. I only share what I personally use and trust. Thanks for supporting Live with Samantha! 🙂
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