Why you have no credit history yet
Two credit bureaus, Equifax Canada and TransUnion Canada, keep a credit report on you. They create it when you first borrow money or apply for credit, and they only collect information about your credit in Canada. So if you’re young or new to the country, you start with little or nothing, and lenders can’t see how you handle credit.
A debit card doesn’t help: it spends your own money, so there’s nothing to report.
Step 1: Check your credit reports free
You can see your credit report free online from both bureaus. TransUnion calls its version a “Consumer Disclosure”. You can also ask both to mail you a free copy. Checking your own report or score won’t affect your credit rating.
Step 2: Get credit in your own name
| Option | How it works | Good to know |
|---|---|---|
| Secured credit card | You give the card issuer a security deposit. Your credit limit is usually equal to or higher than the deposit. | Made for people with no credit history or bad credit, including newcomers. |
| Student or starter card | Some banks offer low-limit cards to students and people new to credit. | Ask your bank what it offers when you open an account. |
| Credit card with a guarantor | A guarantor, often a parent, agrees to pay the balance if you don’t. | The guarantor is responsible for the debt, but doesn’t get to use the card. |
| Additional cardholder | Someone adds you to their card. | Handy for spending, but it doesn’t build your credit history: the account isn’t yours. |
To get a credit card in your own name, you must be the age of majority in your province or territory.
Step 3: Use it lightly and pay on time
- Pay at least the minimum on time, every time. Set up an automatic payment so you never miss one.
- Use less than 30% of your total credit limit. On a $1,000 limit, that’s under $300 at any time.
- Pay the full balance each month if you can, so you pay no interest.
- Keep your first card open. Lenders like a long, stable history.
Try it: how much of your limit you’re using.
30%
Good
Under about a third is fine for most scores.
A rule of thumb: scoring models differ, and paying on time matters most.
How long things stay on your report
- Late or unpaid credit cards and loans: up to six years.
- Credit inquiries by lenders: three years with Equifax, six years with TransUnion.
- Bankruptcy: usually six years after you’re discharged (seven years with TransUnion in Newfoundland and Labrador, Ontario, Prince Edward Island and Quebec), and 14 years if you declare bankruptcy more than once.
- Consumer proposals: three years after you’ve paid off the debts in it, or six years after you signed it, whichever comes first.
Mistakes to avoid
- Missing a payment. It can stay on your report for up to six years.
- Applying for lots of credit at once. Each application by a lender is recorded as an inquiry for three to six years.
- Relying on being an additional cardholder. It doesn’t build your own history.
- Paying someone to fix your credit. You can get your report and dispute mistakes yourself, free.
Learn more
See credit scores explained for what makes up your score, how to make a budget to make sure you can pay your card on time, and the credit card payoff calculator for what carrying a balance costs.