5 Common Credit Mistakes Newcomers to Canada Make – And How to Avoid Them

Moving to Canada is exciting, but navigating the financial system, especially the credit landscape, can be a steep learning curve for newcomers. Building strong credit is essential in Canada. It affects your ability to rent an apartment, buy a car, get a mortgage, or even secure a phone plan. Unfortunately, many new immigrants make critical credit mistakes early on that can take years to fix.

In this article, we’ll explore the 5 most common credit mistakes newcomers to Canada make - and how to avoid them like a pro.

1. Not Getting a Credit Card Early

The Mistake: Many newcomers delay applying for a credit card because they believe they need to wait until they have a job or permanent residency—or they fear falling into debt.

Why It Hurts: In Canada, having a credit card and using it responsibly is one of the fastest ways to build your credit history. No credit is almost as problematic as bad credit.

How to Avoid It:

Apply for a secured credit card as soon as you open a Canadian bank account.

Use your card for small, recurring expenses (like groceries or a phone bill), and pay it off in full each month.

Tip: Some banks offer credit cards designed specifically for newcomers, with low requirements and added perks.

2. Maxing Out Credit Limits

The Mistake: Using too much of your credit limit—especially maxing out your card—can harm your credit score, even if you pay your bills on time.

Why It Hurts: One of the key factors in your credit score is credit utilization—the percentage of your limit that you use. Experts recommend staying below 30% of your credit limit.

How to Avoid It:

Monitor your spending and keep your balance low.

Request a credit limit increase after 6 months of responsible use.

Consider having two credit cards to spread out expenses and reduce utilization.

Tip: You can pay your credit card multiple times a month to keep the balance low.

3. Missing or Late Payments

The Mistake: Forgetting to pay your bills on time—or assuming it’s okay to delay payments.

Why It Hurts: Your payment history is the most important part of your credit score. Even a single late payment can stay on your credit report for up to 7 years.

How to Avoid It:

Set up automatic payments for at least the minimum balance.

Use budgeting apps or calendar reminders.

Always pay at least the minimum amount by the due date, even if you’re short on cash.

Tip: Some banks allow you to choose your due date. Sync it with your payday to make things easier.

4. Closing Credit Accounts Too Soon

The Mistake: Canceling credit cards or lines of credit too early, especially after paying them off.

Why It Hurts: Closing a credit account can lower your average account age, which negatively affects your credit score. It also reduces your available credit, increasing your utilization rate.

How to Avoid It:

Keep your oldest accounts open, even if you don’t use them often.

If you’re not using a card, put a small recurring charge (like a Netflix subscription) on it to keep it active.

Tip: Cards with no annual fee are easy to keep open long-term.

5. Ignoring Credit Reports

The Mistake: Not checking your credit report because you’re new or don’t know how.

Why It Hurts: Errors, identity theft, or unpaid bills can appear on your report and damage your score. If you don’t catch them early, they can linger for years.

How to Avoid It:

Request your free credit report from Equifax and TransUnion once a year.

Review it for accuracy—look for unfamiliar accounts or incorrect payment history.

Report any errors immediately.

Tip: Use apps like Borrowell or Credit Karma Canada for free credit monitoring and score tracking.

Final Thoughts: Build Credit Like a Local

As a newcomer to Canada, it’s essential to understand how the credit system works. These five credit mistakes are avoidable with the right mindset and habits. Start small, stay consistent, and check your progress regularly.

Want to build your credit score faster?

Explore newcomer banking packages, join financial literacy webinars, and use tools that help you track your credit health. For more insights on how navigate the financial system in Canada and build your credit, open a free account