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Moving to Canada often means rebuilding your credit history from scratch. One newcomer explains the hidden challenges, and the changes finally underway.
Canada continues to attract skilled immigrants from across the world, but adapting to the new culture isn’t always easy. Most newcomers have to work through a long checklist: get a SIN, open a bank account, find housing, build a credit file. While each step seems straightforward on its own, together it can feel relentless for the first few months.
When I arrived from the UK on a two-year visa in 2019, I quickly ran into one of the less obvious hurdles: Canada’s credit system. Despite having a strong credit history at home, it didn’t carry over. I had to start from scratch.
That lack of credit history affects everything. Getting a basic credit card is challenging. Essentials like phone and internet, too, since they often require a credit check. And if an application is rejected, reapplying can ding your credit report a little more, making the next attempt even more difficult.
There are signs that this is starting to change, though. In 2023, Scotiabank became the first major Canadian bank to recognize overseas credit history, and others are gradually exploring similar approaches. More on that later.
One of the biggest early surprises was how central credit is to Canada’s financial system, and how strongly everyday banking nudges you toward it.
In the UK, it’s easy to live comfortably without ever relying on a credit card. Debit cards are widely accepted, transactions are typically unlimited, and even basic chequing accounts don’t usually come with minimum balance requirements. Cash withdrawals are also generally free at ATMs, even outside your own bank.
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The experience is different in Canada. Many everyday chequing accounts come with monthly fees unless you maintain a minimum balance—often in the low thousands of dollars—and transaction limits are common.
When I arrived, I chose TD Canada Trust because of its branch and ATM network, which made day-to-day access easier. Even so, my chequing account came with a 25-transaction monthly limit, after which additional transactions were charged at $1.25 each. There was a $3,000 minimum balance requirement to avoid a monthly fee.
In my first couple of months in Canada, I tried to work around the 25-transaction limit by withdrawing larger amounts of cash—$200 at a time, for example—but that strategy quickly proved impractical. Many businesses were already cashless, which meant using my debit card for small purchases and “wasting” my limited monthly transactions on things like a $4 coffee.
At the same time, I ran into situations where cash or debit simply weren’t accepted. Renting a car required a credit card. Even signing up for certain services, like classes at Second City, required one (at least in 2019).
It quickly became clear that in Canada, a credit card isn’t just convenient, it’s often essential.
For many newcomers, getting a first Canadian credit card can feel like a catch-22. You need credit history to qualify for a card, but you need a card to build that history.
As a temporary resident, I found the requirements especially difficult to meet. Banks often require recent Canadian pay stubs or proof of employment, which are hard to provide when you’ve only just arrived and are still looking for work. My visa allowed me to find a job after entering the country, but the banking system wasn’t designed around that reality.
There are a couple of ways around these strict requirements.
One of the most common ways around this hurdle is a secured credit card. These cards require you to deposit money into a linked account, which the bank can use as collateral if you fail to repay the balance.
In my case, I put down $1,000 to secure a card. It finally freed me from constantly worrying about transaction limits and made everyday life much easier—including renting a car so I could see more of the country I’d just moved to.
Most major Canadian banks offer secured credit cards, alongside providers like Neo Financial, Capital One, and Home Trust. Some secured cards offer rewards, but their main purpose is helping newcomers build credit.
The next level up from a secured credit card is a newcomer credit card. These are regular credit cards that relax some of the usual Canadian credit-history requirements for recent immigrants, though applicants still need to demonstrate sufficient income or financial stability.
This makes them easier to qualify for than standard credit cards, but generally more difficult than secured cards. If you qualify, newcomer cards tend to be more attractive: they don’t force you to tie up cash as collateral, offer higher credit limits, and many have generous rewards and welcome bonuses.
Fortunately, the newcomer credit landscape has improved since I arrived in the country.
One of the biggest shifts is that some financial institutions are starting to recognize overseas credit history, which is big news for newcomers who built strong financial track records before moving. Scotiabank was the first major Canadian bank to assess international credit data through its StartRight Program via a partnership with cross-border credit bureau Nova Credit. The program currently supports credit histories from countries including the United Kingdom, United States, Australia, India, Mexico, Nigeria, South Korea, and several others.
Other institutions are beginning to follow suit. American Express and Rogers Bank also consider overseas credit in certain cases, while some of Canada’s major banks may manually review foreign credit reports if you visit a branch to apply.
Equifax Canada has also introduced a Global Consumer Credit File, which helps lenders in Canada more easily access international credit histories.
There are still gaps in the system, but the direction is clear: Canada’s financial infrastructure is becoming more globally connected. For financially responsible newcomers, this could help make the transition a lot smoother.
Even with these improvements, newcomers to Canada’s credit system need to be aware of a major pitfall: credit utilization.
Many new credit cards (and especially those geared towards students or newcomers) start with relatively low limits, often around $1,000. The problem is that credit scoring models prefer you to use less than 30% of your available credit. If you exceed this threshold, your credit score can fall—even if you pay your bill in full every month.
On paper, the rule makes sense. Someone consistently using $10,000 of a $20,000 limit (that is, 50% credit utilization) may appear to be relying heavily on borrowed funds to make ends meet. But the same formula applies to people with much smaller limits: spend $500 on a card with a $1,000 limit, and your utilization rate jumps to 50%.
For newcomers, that can happen surprisingly easily. A few weeks of groceries, transportation costs, or a car rental can easily push you close to the limit.
I learned this the hard way. At one point, I spent $700 in a month on my secured credit card while applying for a new rental apartment. Even though I hadn’t missed a single payment, my credit score dropped by about 60 points because my utilization rate was too high. I wasn’t missing payments or overspending; I had just used too much of a very small credit limit. The landlord denied my application because of the lower score.
It never occurred to me that your credit score can fall even when you’re using credit responsibly and paying on time. For many newcomers, that isn’t obvious until it happens.
One way to avoid this issue is to pay down your credit card balance throughout the month instead of waiting for the statement due date. Until you qualify for a higher credit limit, this is often the easiest way to keep your utilization ratio low and protect your score.
Adjusting to life in a new country comes with a long list of challenges, and learning how Canada’s credit system works is one of the less obvious ones. Because credit scores influence so much in Canada, newcomers usually have to start building financial credibility right away.
The system is moving in the right direction, and the acceptance of overseas credit histories is an important step forward. If that trend continues, future newcomers may spend less time navigating financial roadblocks and more time focusing on what really matters: building a life in their new home.
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