You just landed in Canada with big plans. Maybe you want to buy a home. Maybe you want to start building a real estate portfolio. Either way, Residential Mortgage Financing.
Here’s the problem: you don’t have one.
It doesn’t matter if you had perfect credit in your home country. It doesn’t matter if you were a business owner with millions in assets. In Canada, your credit file starts empty. And an empty credit file is almost as bad as a bad one when you’re trying to get approved for a mortgage.
The good news? Building credit in Canada doesn’t have to take years. With the right strategy, you can go from zero to mortgage-ready in 12 months or less. I’ve seen newcomers do it faster than that.
Let me give you the exact playbook.
Want personalized guidance on building mortgage-ready credit as a newcomer? We can review your current credit status and create a timeline for when you’ll be ready to buy.
How Canadian Credit Works (The Quick Version)
Canada has two credit bureaus: Equifax and TransUnion. They track your borrowing and payment behavior and assign you a credit score between 300 and 900. Most mortgage lenders want to see a score of at least 600-650, and the best rates kick in around 680-720+.
Your score is built from five main factors:
| Factor | Weight | What It Means |
|---|---|---|
| Payment history | 35% | Do you pay on time? Every time? |
| Credit usage | 30% | How much of your available credit are you using? |
| Credit history length | 15% | How long have your accounts been open? |
| Credit mix | 10% | Do you have different types of credit? |
| New credit inquiries | 10% | Have you applied for a lot of credit recently? |
Payment history is king. Pay every bill on time—not almost on time, not a day late, on time—and you’re doing the most important thing for your score. Miss even one payment and it can drop your score significantly and stay on your report for years.
Credit usage means you shouldn’t max out your credit cards. The general rule is to keep your balances below 30% of your credit limit. Below 10% is even better. If you have a card with a $1,000 limit, try to keep the balance below $300—ideally below $100.
Step 1: Get a Secured Credit Card (Day One)
This is your first move. Do it the week you arrive in Canada.
A secured credit card works like a regular credit card, except you put down a security deposit—usually $300 to $1,000—that becomes your credit limit. The bank holds your deposit as collateral, so they’re taking almost no risk. That’s why they’ll approve you even with zero credit history.
Every major bank offers a secured card:
- Home Trust Secured Visa — Popular with newcomers, reports to both bureaus
- Capital One Guaranteed Secured Mastercard — Low deposit requirement
- BMO Prepaid Mastercard / Secured options — Good if you bank with BMO
- CIBC, TD, and other big banks — Most have secured card options for newcomers
Here’s how to use your secured card to build credit fast:
- Set up one or two small recurring payments on it (a streaming subscription, your phone bill)
- Pay the full balance before the due date every single month
- Never carry a balance—the interest rates on secured cards are brutal
- Keep usage below 30% of your limit
That’s it. No tricks, no secrets. Consistent on-time payments on a secured card build your credit score steadily month after month.
After 6-12 months of perfect payments, most card issuers will either upgrade you to an unsecured card (and return your deposit) or increase your limit. At that point, you can also apply for a regular credit card to add a second trade line.
Step 2: Get a Second Credit Product (Month 2-3)
Mortgage lenders typically want to see at least two active credit trade lines with at least 12 months of history. One credit card isn’t enough. You need a second product. For detailed strategies on optimizing your credit for investment mortgage approval, see our complete guide.
Your options:
Credit Builder Loan
Some credit unions and fintech companies offer credit builder loans. Here’s how they work: you “borrow” a small amount (say $1,000-$2,500), but instead of getting the money upfront, it goes into a locked savings account. You make monthly payments for 12-24 months. Once you’ve paid it off, you get the money. The payment history is reported to the credit bureaus.
It’s a bit of a weird product—you’re basically paying to prove you can make payments. But it works. Each on-time payment builds your credit history, and at the end, you’ve also got a small chunk of savings.
Refresh Financial is one of the most well-known credit builder programs in Canada. They specifically market to newcomers and people rebuilding credit.
A Second Credit Card
If you can get approved for a second credit card—even another secured one—that works too. Two cards with different issuers give you two trade lines, and lenders like seeing that multiple creditors trust you.
A Small Personal Loan or Line of Credit
If your bank will give you a small personal loan or line of credit (sometimes possible if you have a strong relationship or significant deposits), this creates a different type of credit trade line. Having a mix of revolving credit (cards) and installment credit (loans) is good for your score.
Car Loan or Lease
If you need a vehicle, financing it builds credit. Just make sure the payments fit your budget—missing car payments hurts your score just like missing credit card payments.
Step 3: The Authorized User Strategy
Here’s a move that can accelerate your credit building significantly: become an authorized user on someone else’s credit card.
When someone adds you as an authorized user on their credit card, that account’s history can appear on your credit report. If your spouse, parent, or close family member in Canada has a credit card in good standing—long history, low balance, perfect payments—being added as an authorized user can give your credit file an instant boost.
A few things to know:
- Not all card issuers report authorized user accounts to both bureaus. Check before you rely on this strategy.
- The primary cardholder’s behavior affects your credit. If they miss payments or max out the card, it hurts you too.
- You don’t even have to use the card. Just being on the account is enough for the credit reporting benefit.
- Some mortgage lenders may not count authorized user trade lines as “your own” credit. They might still want to see accounts where you’re the primary holder. So use this as a supplement, not a replacement, for your own credit products.
This strategy works best between spouses. If one partner arrived in Canada earlier and has been building credit, adding the other partner as an authorized user can bring them up to speed quickly.
Step 4: The Bills That Don’t Build Credit (And How to Fix That)
Here’s something frustrating: you’re probably paying several bills every month that don’t get reported to the credit bureaus.
- Rent payments
- Utility bills
- Cell phone bills
- Internet bills
- Insurance payments
You pay all of these on time every month, but none of them help your credit score. In a perfect world, they would. But that’s not how the Canadian credit system works—at least not by default.
However, there are services that can report your rent payments to the credit bureaus. Borrowell (which connects to Equifax) and a few other fintech platforms offer rent reporting services. You pay a small monthly fee, and your on-time rent payments get added to your credit report.
Is it worth it? If you’re a newcomer trying to build credit fast, yes. It’s one more positive trade line on your report, and it costs very little.
For phone and utility bills, these generally only show up on your credit report if you miss payments (as a negative mark). They won’t help you build positive history, but they can absolutely hurt you. So pay them on time.
Equifax vs TransUnion: What Newcomers Need to Know
Canada has two credit bureaus, and they don’t always have the same information about you. Some lenders report to both, some only report to one. And mortgage lenders may pull from either bureau—or both.
Equifax Canada: This is the bureau most mortgage lenders in Canada pull from. If you had to pick one bureau to focus on, this is it. Your Equifax score is often called your “Beacon score” in mortgage circles.
TransUnion Canada: Also widely used, especially by alternative lenders and for consumer credit products.
As a newcomer, here’s what to do:
- Check which bureau your credit products report to. Ideally, get products that report to both.
- Pull your own credit report from both bureaus periodically to make sure everything is accurate. You’re entitled to one free report per year from each bureau.
- If you spot errors, dispute them immediately. Errors happen more often than you’d think, and for newcomers with thin files, one error can make a bigger difference.
You can check your Equifax report through Borrowell (free) and your TransUnion report through Credit Karma Canada (free). I recommend signing up for both. Monitor your scores monthly and watch them climb as your credit history builds.
Already building credit and wondering if you’re ready to apply for a mortgage? Let’s pull your current credit profile and see exactly where you stand and what might still need work.
The Timeline: From Zero to Mortgage-Ready
Let me give you a realistic timeline for building mortgage-ready credit from scratch.
Month 1:
- Open a secured credit card
- Set up automatic payments for a small recurring charge
- Open a Canadian bank account if you haven’t already
Month 2-3:
- Apply for a credit builder loan or second credit card
- Become an authorized user on a family member’s card (if possible)
- Sign up for rent reporting through Borrowell or similar service
Month 3-6:
- Continue making every payment on time
- Keep balances low (under 30% of limits)
- Check your credit reports for accuracy
- You should start seeing a score appear (usually takes about 3-6 months of activity)
Month 6-9:
- Your score should be in the mid-to-high 600s if you’ve followed this playbook
- Consider applying for an unsecured credit card to add another trade line
- Don’t close your secured card—account age matters
Month 9-12:
- Score should be approaching 700+ with perfect payment history
- You now have at least two trade lines with 9-12 months of history
- You’re getting into mortgage-approval territory
Month 12+:
- With two trade lines showing 12+ months of perfect payments, most A lenders will consider your credit file acceptable
- Your score should be 700+ if you’ve followed every step
- Time to talk to a mortgage broker about your buying power
Can it happen faster? Sometimes. If you combine the authorized user strategy with your own products and everything is reported to both bureaus, some newcomers hit mortgage-ready credit in 6-9 months. But planning for 12 months is smart—it gives you a buffer for any hiccups.
Things That Will Wreck Your Progress
Building credit is slow. Destroying it is fast. Avoid these mistakes:
Missing payments. Even one late payment stays on your report for 6-7 years. Set up automatic payments or calendar reminders. There’s no excuse for missing a due date.
Maxing out your credit. High usage tanks your score. If your limit is $500 and you put $450 on it, your usage is 90%. That kills your score even if you pay it off in full every month. Why? Because the balance gets reported to the bureau on your statement date, not your payment date. So the bureau sees a 90% usage rate. Keep balances low at all times.
Applying for too much credit at once. Every credit application generates a “hard inquiry” on your report. A few inquiries are fine, but a bunch in a short period makes you look desperate for credit. Space out your applications.
Closing old accounts. Your oldest credit account helps your average account age. Don’t close your first secured card when you get a better one—keep it open, even if you rarely use it.
Co-signing or guaranteeing for others. If someone asks you to co-sign their loan or credit card, their debt becomes your debt on your credit report. If they miss payments, your credit gets damaged. Be very careful with this.
Credit and Your Real Estate Investment Goals
Here’s why all of this matters beyond just “getting approved”: your credit score directly affects your interest rate, and your interest rate directly affects your cash flow.
Let me show you with real numbers. On a $400,000 mortgage:
| Credit Score Range | Approximate Rate Impact | Monthly Payment Difference |
|---|---|---|
| 760+ | Best available rate | Baseline |
| 700-759 | +0.10-0.25% | +$20-50/month |
| 650-699 | +0.25-0.75% | +$50-150/month |
| 600-649 | +0.75-2.00% (B lender territory) | +$150-400/month |
| Below 600 | +2.00%+ (private lender) | +$400+/month |
On an investment property, that monthly payment difference is the difference between positive cash flow and negative cash flow. A 1% higher rate on a $400,000 mortgage costs you roughly $200 per month—$2,400 per year. Over five years, that’s $12,000 that could have been in your pocket.
Building great credit before you apply for a mortgage isn’t just about getting approved. It’s about getting the best possible terms so your investments actually make money from day one.
The Bottom Line
Building Canadian credit as a newcomer is a process, but it’s not a mystery. Get a secured card on day one. Add a second credit product within three months. Pay everything on time, every time. Keep balances low. Monitor your reports. And within 12 months, you’ll have the credit profile you need to start buying real estate. Once your credit is established, learn how to get a mortgage as a newcomer or immigrant to navigate the full qualification process.
Don’t wait. Every month you delay starting is a month added to your timeline. The credit clock starts ticking the day you open your first account—so open it today.
Have questions about mortgage pre-approval as a newcomer with limited credit history? Book a call and we’ll assess your current situation and outline the exact steps to get mortgage-ready.
Frequently Asked Questions
Does my credit score from my home country transfer to Canada?
How long does it take to build a credit score in Canada from zero?
What is a secured credit card and how does it help build credit?
What credit score do I need for a mortgage in Canada?
Does being an authorized user on someone's credit card build my credit?
Should I check my Equifax or TransUnion score for mortgage purposes?
Will checking my own credit score hurt it?
Can I get a mortgage with only 6 months of Canadian credit history?
Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.
Written by
LendCity
Published
February 15, 2026
Reading Time
13 min read
High-Ratio Mortgage
A mortgage with less than 20% down, requiring default insurance. Not available for 1-4 unit investment properties in Canada. However, 5+ unit multifamily can access CMHC MLI Select, and house hackers in owner-occupied 2-4 plexes can use insured financing.
CMHC Insurance
Mortgage default insurance from Canada Mortgage and Housing Corporation. For 1-4 unit investment properties, investors must put 20%+ down (no insurance available). However, CMHC offers MLI Select for 5+ unit multifamily properties, and house hackers can access insured mortgages with 5-10% down.
Private Mortgage
A mortgage from a private lender rather than a traditional bank, typically with higher rates but more flexible qualification requirements.
B Lender
Alternative lenders that serve borrowers who don't qualify with major banks, offering slightly higher rates with more flexible criteria.
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.
Credit Score
A numerical rating (300-900 in Canada) that represents your creditworthiness, affecting mortgage rates and approval. 680+ is typically needed for best rates.
Interest Rate
The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.
Mortgage Broker
A licensed professional who shops multiple lenders to find the best mortgage rates and terms for borrowers. Unlike banks, brokers have access to dozens of lending options.
Security Deposit
Money collected from tenants at the beginning of a lease to cover potential damages beyond normal wear and tear or unpaid rent at lease end. Security deposit rules vary by province, with some jurisdictions limiting amounts and requiring deposits to be held in trust.
A Lender
A major bank or institutional lender offering the most competitive mortgage rates and terms but with the strictest qualification criteria, including full income verification and stress test compliance. Most investors use A lenders for their first four to six properties.
Hover over terms to see definitions, or visit our glossary for the full list.
- Credit Score Optimization for Investment Mortgage Approval
- Scaling from 5 to 20 Properties: The Financing Roadmap
- A Lender vs B Lender: Which Is Right for You?
- New to Canada? How to Get a Mortgage as a Newcomer or Immigrant
- First-Time Investor Financing: Every Mortgage Option Available to You in Canada