Locked out: 8 in 10 new Canadians hit a credit wall — and it's costing them their future

"For newcomers beginning their lives in Canada, getting off to a strong financial start can be incredibly challenging without access to the credit they need," said Muhammad Kara, associate vice president, New to Canada, Everyday Advice Journey at TD (4). "We recognize just how critical it is for new Canadians to build a credit history as they establish themselves and set the foundation for their future here."

Credit challenges aren’t about lack of awareness

While one might assume these hurdles are due to inexperience, the data tells a different story. According to the TD survey, 68% of respondents already knew about credit scores before arriving in Canada, and 92% recognized the importance of building credit in Canada (5).

The knowledge was there. The access was not.

Among the survey respondents, 80% made at least one application for credit, and of those applicants, 82% reported hitting at least one barrier.

The most common type of credit new immigrants applied for included credit cards (92%), followed by car loans (18%) and mortgages (13%).

The top obstacles reported were:

• Limited knowledge of credit card rewards programs (35%)
• Lack of familiarity with Canada's financial system (31%)
• Being approved only for lower credit limits or loan amounts (31%)

Lower credit limits translates to real obstacles

Not being approved for higher credit limits is more than an inconvenience for new immigrants.

Two-thirds (66%) of surveyed newcomers who had applied for credit expressed concern about their Canadian credit history, while 22% said restricted access made it harder to maintain a comfortable lifestyle.

It gets worse. According to Statistics Canada, approximately 26% of all credit-invisible economic families in Canada are immigrants (6). Immigrant families who had been in Canada for fewer than two years were disproportionately credit invisible, with a rate of 14.8%, compared to 7.5% for Canadian-born families (7). Equifax Canada research estimates that more than 2.5 million Canadians aged 18 and over are currently credit invisible (8) — making it easier for these Canadians to fall into oppressive debt cycles and slip under the poverty line.

Stress, higher costs and housing hurdles

A separate 2024 survey conducted by Interac found that more than 8 in 10 newcomers (85%) reported at least one financial barrier affecting their security, compared to 58% of the general Canadian adult population (9). That gap underscores how lopsided the burden really is for new immigrants in Canada.

Specifically, the TD survey found that because of limited credit access:

• 29% of newcomers reported increased financial stress or anxiety
• 28% faced limits on their ability to borrow
• 27% encountered higher interest rates
• 27% struggled to secure housing (a particularly difficult situation, given that Canada's rental vacancy rate hit a historic low of 1.5% during the 2023 immigration surge (10)

"Our survey revealed just how impactful credit challenges can be for Canadian newcomers," Kara noted. "With many new Canadians experiencing stress and anxiety, loan access restrictions, or difficulty achieving their unique financial goals, the need for tailored solutions is evident."

Solutions and support for newcomers to Canada

When asked what would help, 1 in 3 (34%) newcomers said better access to financial advisers who understand their unique situation would make a meaningful difference (11).

While personalized advice isn't always affordable when you're just getting started, Canada's big banks have begun expanding programs designed specifically for newcomers. TD's New to Canada Banking Package now offers credit cards with limits up to C$15,000 for eligible permanent residents, foreign workers and international students — no Canadian credit history required. The package also includes up to C$1,930 in value for new permanent resident clients.

Equifax Canada notes that new-to-Canada consumers' credit scores increase by more than 10 points on average within their first two years, as they build credit history (12). The key is getting that first account opened — even a basic secured credit card can start the clock on your Canadian credit file.

Quick steps to help newcomers to Canada build credit

Building credit in Canada is one of the first — and most important — financial steps for new immigrants. Without a Canadian credit history, it can be difficult to rent an apartment, get a phone plan, qualify for a mortgage or even secure certain jobs.

Here are practical, realistic ways newcomers can start building credit right away:

Open a newcomer banking package

Major banks offer dedicated newcomer programs that include chequing accounts and, often, a first credit card — even without Canadian credit history.

Examples include:

• Scotiabank — StartRight Program
• RBC — Newcomer Advantage
• TD — New to Canada Banking Package
• CIBC — Newcomer to Canada

These programs may offer:

• No-fee banking for the first year
• A credit card with no prior credit history required
• Access to financial advisors

Why this works: Getting your first Canadian credit card is the fastest way to begin generating a credit score

Apply for a secured credit card

If you’re denied a regular credit card, a secured credit card is a strong backup option. It allows you to build a credit history and increase your credit store. With a secured credit card you provide a refundable security deposit — often $500 to $1,000 — and this becomes your secured card’s credit limit. As you use the card, and pay the balance, these transactions are reported to credit bureaus. This report builds both your credit history and your credit score.

Key tip: Keep your balance below 30% of your limit and pay it in full every month.