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Welcome to Canada, where your credit score is as important as a warm coat in winter! Fresh off the plane and ready to dive into your journey, you'll find that a good credit score in Canada opens many doors – from apartments to phone plans. In a way, credit scores rule all here in Canada.

So it’s about time we figure out how we can make them work for us, newcomers.

Luckily, building your credit score from scratch is less intimidating than it sounds. Morteza Hessari, Financial Advisor at Scotiabank helps us understand how.

What is a Credit Score and Why Does it Matter?


A credit score in Canada is a three-digit number, ranging from 300 to 900, that represents your creditworthiness and reliability of debt repayment. Created by credit bureaus like TransUnion and Equifax, this score is crucial for financial actions like renting homes, securing loans, or obtaining favourable interest rates. The higher your score, the more likely you are to be trusted by banks and lenders, and get better rates.

Read more: Renting vs Buying a home as a newcomer in Canada

What Affects Your Credit Score in Canada?

Payment History 

Your record of paying bills on time is crucial. Late or missed payments negatively impact your score.

Credit Utilization Ratio 

This is the amount of credit you use compared to what you have available. Lower utilization typically leads to a higher score.

Length of Credit History 

Longer credit histories provide more data and can lead to higher scores. It shows reliability over time.

Types of Credit 

Having a mix of credit types (like loans and credit cards) can positively affect your score. It shows you can handle various credit responsibilities.

New Credit Inquiries 

Applying for several new credit accounts in a short period can lower your score. Each application typically involves a hard inquiry that can slightly reduce your score.


Keep in mind: your credit history from your home country doesn’t transfer with you to Canada.

So considering this, being new to Canada, you won’t have any credit history upon arrival.

Then what is the best way to start building credit from scratch? You may ask.

First thing: apply for a Canadian credit card and regularly make payments on time. This is the easiest way to establish a credit history and build a fair level-based credit score that will allow you to apply for credit.

How to Choose the Right Credit Card As a Newcomer

When choosing the right credit card, consider your spending habits and financial goals. Ask yourself if the card will be used mainly for daily expenses, like groceries and gas, or if you plan on carrying a balance.

If it is for everyday spending, look for cards offering rewards like points for travel, cashback, or discounts on various products and services. These rewards can significantly boost your savings and provide value on every purchase. 

On the other hand, if you might carry a balance, prioritize finding a card with a low-interest rate to minimize costs.

Scotiabank offers programs that make it easier for new immigrants to get credit cards, even if you don’t have any Canadian credit history yet. These cards are tailored to fit different needs and lifestyles, whether you’re looking for rewards, low fees, or other benefits.

Remember, the right card for you is the one that fits well with your lifestyle and helps you achieve your financial objectives.

Young woman in red sweater making payment in-store with credit card

How to Use Credit Cards Responsibly to Build a Good Credit Score in Canada

Make Timely Payments 

We’ve said it before and we’ll say it again:  it is crucial to ensure you pay at least the minimum due on your credit card before the due date every month. This is the most influential factor in building a good credit score.

Understand Your Credit Statement 

Familiarize yourself with your monthly statement, which includes your balance, minimum payment due, and due date. Knowing these details is key to managing your credit card effectively.

Monitor Credit Utilization 

Keep your credit utilization—how much of your available credit you’re using—low, preferably below 35%. This means if your credit limit is $1,000, try to use $350 or less. Lower utilization shows lenders you’re not overly dependent on credit.

Read Your Credit Card Terms 

Be aware of the interest rates, fees, and other terms of your credit card. This helps you avoid unexpected charges and understand how your actions can affect your credit score.

Regularly Check Your Credit Score 

Keep an eye on your credit score through Canada’s main credit bureaus, TransUnion and Equifax. Most bank institutions also enable credit score checking directly from their platforms. Monitoring helps you understand how your financial behavior impacts your score and allows you to correct any inaccuracies.
And no, contrary to some popular belief, frequent checks of your credit score (or ‘credit views’) WILL NOT  negatively impact your credit. 

There is an important difference between credit views, which is to verify your score, and credit inquiry, which is to apply for new credit. 

Limit New Credit Inquiries 

Apply for new credit cautiously. Too many hard inquiries in a short period can signal risk to lenders and slightly lower your score.

What Are Common Credit Card Usage Mistakes to Avoid?

Finally, to make sure you keep your financial health in good standing and your credit score on the rise, here are some common mistakes you should stay away from:

Paying Late 

Late payments can significantly harm your credit score. Always ensure you pay at least the minimum due on time.

Making Only Minimum Payments

Consistently making only the minimum payment means you’re paying more in interest and it will take longer to clear your balance.

Running High Balances 

High credit card balances can lead to high credit utilization, negatively impacting your credit score. Try to keep your balances low.

Ignoring Transactions 

Regularly review your credit card transactions to spot and report any unauthorized activity and to keep track of your spending.

Not Knowing Your Card Terms 

Be aware of your card’s interest rate, fees, and other terms. This knowledge helps avoid surprises and plan better financial strategies.

Choosing the Wrong Card 

Ensure your credit card aligns with your spending habits and financial goals. Consider factors like rewards, fees, and interest rates.


It’s easy to spend more with a credit card than you would with cash. Stick to a budget to avoid debt accumulation.

Applying for Too Many Cards 

Each new application can slightly lower your credit score. Apply only when necessary and beneficial.

Taking Cash Advances

Cash advances usually come with high fees and interest rates, making them an expensive way to borrow money.

Using One Credit Card to Pay Off Another 

Transferring balances might seem like a solution but can lead to a cycle of debt if not managed wisely.


Read More: 8 financial mistakes to avoid when immigrating to Canada

In summary

Even though this concept of a credit score might seem to make the start of your Canadian journey a little more adventurous than originally planned, you now understand that it’s not as hard as it seems to start building trust with banks. Start by picking a credit card that fits your needs, always pay your bills on time, and avoid some simple mistakes. In about 3 to 6 months, like our friends at Scotiabank say, you’ll be on your way to a good financial standing. Building a credit score is a step-by-step journey, and you’re already on the right path!

Next step: How to build and strengthen your credit history in Canada


What is the best way to start building credit from scratch in Canada?

Does my home country’s credit history influence my credit score in Canada?

Does frequently checking your credit score/history affect it negatively?

How long does it take to build a credit score?

About the author

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Stephanie Ford

Finance, Law and Immigration Writer
Stephanie is a content marketer who has written for law firms (with a focus on immigration and privacy), legal tech companies, and finance professionals for more than 9 years. She earned a Bachelor of Laws and a Graduate Diploma in Financial Planning in Australia. Stephanie is now a permanent resident of Canada and a full-time writer at Moving2Canada.
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