Canada and the US are similar in many ways, so moving from the United States to Canada may seem like an easy transition. Unfortunately, you cannot transfer your US credit history to Canada when you move. The way credit reporting is handled is one of the many minute differences between Canada and the US, so when you arrive in Canada, you must begin building your credit from scratch.
Here’s what you need to know before you make the move north to Canada.
How Do I Transfer My Credit History from the US to Canada?
Unfortunately, you can’t transfer your credit history from the US to Canada. Even though the credit bureaus Transunion and Equifax operate in Canada and the US, they cannot share data between the two countries. This is due to privacy laws and the fact that data is reported and tabulated differently in each country. For instance, in Canada credit scores range from 300 to 900, whereas in the US, they range from 300 to 850.
You’ll have to build a Canadian credit score independently from your US credit score.
Does the US Credit History Affect Your Ability to Get a Loan in Canada?
For better or worse, your US credit history will not impact your Canadian credit score, meaning it won’t influence your ability to get a loan in Canada.
On the one hand, if your US credit history has derogatory marks, you will have a clean slate in Canada. If you work diligently to build your score in Canada, you won’t have to worry about past mistakes in the US holding you back.
If you have strong credit in the US, the idea of having to build credit once again in Canada is understandably frustrating. The good news is you can build your credit relatively quickly if you prioritize it (more on this below).
That said, you may be able to work with individual lenders to use data from your US score as proof of your creditworthiness when applying for Canadian credit products. There is no guarantee that this strategy will work, and it will not affect your credit score, but it could help you secure things like personal loans or auto loans.
Can I Use my US Credit Score to Get a Credit Card in Canada?
Canadian lenders will not have access to your US credit score, and it will not factor into their decision to approve your credit application in Canada. Unfortunately, without your positive credit history from the US on your side, you may be limited as far as which Canadian credit cards you will be approved for.
To start building credit as quickly as possible, open a secured credit card and make sure you make all your payments on time to start boosting your Canadian credit score.
What is the Impact of Having No Credit History in Canada?
Having no credit history in Canada can limit your ability to take advantage of certain financial tools and products when you first arrive there. Here are some of the impacts to be aware of:
Limits your ability to qualify for credit products
Without a credit history, you may be unable to qualify for credit products such as credit cards, personal loans, auto loans, or mortgages. Without access to these products, you may have a harder time accumulating assets such as a phone plan, vehicle, or real estate, which may be frustrating.
You will probably have to build your credit score before you can qualify for loans that enable you to make these types of purchases. Alternatively, you could use a co-signer with strong credit to help you secure loans while you work to build credit on your own.
Could make it more challenging to rent an apartment
Creditworthiness is a common requirement when renting an apartment, as landlords want to ensure their tenants can pay the rent on time. Without a credit history, proving to a prospective landlord that you’re a reliable tenant could be harder. Having solid references and proof of employment will help your rental application stand out, even if your credit history is new.
New credit products will have higher interest rates
Another downside of having a limited credit history is that you’ll inevitably end up paying higher interest rates on any credit products you use. This means any installment loans, such as car loans or personal lines of credit, will have higher interest rates, making it more expensive to borrow money.
Unable to secure loans or high-limit credit cards
Personal loans and credit accounts are approved based on your credit score and credit history. If you haven’t had a chance to begin establishing your Canadian credit score yet, you might be unable to secure these products. You may find yourself limited to low-limit, secured credit cards, and high-interest rate loans at the beginning of your credit-building journey.
How Can You Build Credit History If You Recently Moved from the USA to Canada?
A strong credit history helps you qualify for products that improve your financial flexibility and mobility, so building your Canadian credit score is essential. Here are some tactics for building your score when moving to Canada.
Open a credit account
To build credit, you must use credit products. In many cases, you may have to start with a secured credit card until your score is strong enough to help you qualify for standard unsecured credit products.
Secured credit cards are backed by your own funds. You put down a cash deposit when you open your account, and that amount will serve as your credit limit. You can then use the card as a typical credit card. If you don’t pay your balance in full each month, you’ll pay interest on the balance you carry. Making on-time payments and keeping your credit utilization below 30% will help you increase your credit score.
Report rent payments to the credit bureau
Reporting your rent payments to the credit bureau is another great way to build your credit profile as a new Canadian. Reporting rent payments helps build your payment history, credit history and credit mix: three important factors that go into calculating your credit score.
When you enroll in Borrowell’s Rent Advantage™ program, your rent payments will be reported to the Equifax credit bureau each month, and the advantage of this program over others in Canada is that you don’t need to involve your landlord at any point of the process.
If you’re renting, you might as well take advantage of the opportunity to use those payments to build your credit history.
Make your payments on time
Your payment history accounts for 35% of your overall credit score, so making on-time payments is essential. When building credit, staying on top of your payments is the easiest and most impactful way to improve your score.
Diversify your credit mix
Your credit mix makes up 10% of your credit score. In other words, you can boost your score by successfully managing multiple different types of credit accounts. Installment loans, rotating accounts (like credit cards and lines of credit), and open accounts (like utility or cell phone bills) are examples of the different types of credit accounts you might have. Holding these different types of accounts signals to lenders that you can manage your money responsibly in different scenarios. Keeping these accounts in good standing will increase your credit score over time.
Review your credit report regularly
Your lenders should report any payments you make to your credit accounts to the credit bureaus monthly. But don’t take this for granted. Sometimes there are reporting errors or delays, which means your credit report may not reflect the positive account data you generate.
Remember to check your credit report for errors or missing information each month. The sooner you catch any errors, the easier (and faster) it will be to correct them, which helps protect your credit score.
Can Canadian Credit History Be Used In The United States?
You cannot use Canadian credit history in the United States. Each country handles credit reporting differently, making it difficult or impossible for credit histories to be transferred between countries. Laws around data privacy also prevent credit bureaus and lenders from sharing data between countries. So, if you plan to move from Canada to the US, you’ll have to start building your US credit history from scratch.
The Bottom Line
A strong credit score is a valuable tool that enables you to borrow money at more favorable rates and improve your financial flexibility. If you’re already accustomed to having a strong credit profile in the US, starting over again in Canada may be frustrating. However, when you prioritize building your score, you can see results relatively quickly. The process may be slow initially, but in time, your efforts will compound, and you’ll have a competitive score again.
