Can I Transfer My American Credit History to Canada?

While moving to a new country can be tedious and expensive, there may be a great new home and job waiting for you when you arrive, as well as the prospect of earning dual citizenship, so all the effort can certainly be worth it. What’s more, moving from the United States to Canada is relatively easy compared to other parts of the world.

However, one thing that you may not be able to pack up in a box is your credit report. Keep reading to find out whether it’s possible to transfer your American credit history to one of Canada’s credit bureaus. 

American vs. Canadian Credit Reports

In Canada, there are two main credit bureaus that can create a credit report in your name when you start using credit products, known as Equifax and TransUnion. These two companies also exist in the U.S., along with a third bureau called Experian. 

Strictly speaking, both the U.S. and Canadian versions of your report are similar in many ways, containing elements such as your:

• Personal information (name, address, etc.)
• Credit accounts & types (currently & recently active products) 
• Credit history (how long products/accounts are used)
• Payment history (paid & unpaid debts) 
• Hard & soft inquiries (new credit applications, credit checks, etc.)
• Credit score (3-digits)

All this said, every bureau has a slightly different way of creating and modifying all of these credit-related elements. There are even a couple of distinct features that appear on Canadian reports but don’t on versions from the United States. 

For instance, every account within a Canadian report is assigned a credit ‘rating’ from 1 to 9, which goes up and down according to your payment activity. If you consistently pay your debts on time, your rating will stay within the 1-range, giving you good credit and added creditworthiness when you apply for credit products in the future.

Each rating is also accompanied by a letter that indicates the type of credit involved:

• I = Installment (loans, etc.)
• R = Revolving (credit cards, etc.)
• O = Open (student loans, etc.)

Additionally, Canadian credit scores range from 300 (on the low end) to 900 (on the high end), whereas most credit scores in the U.S. only range from 300 to 850. Although these aren’t huge differences in retrospect, they do make things more complicated if you’re trying to transfer your whole life from the U.S. to Canada, or vice versa (learn about transfer your credit from Canada to the U.S.).

Is It Possible to Transfer My Credit History Between Countries?

Unfortunately, it is not possible to transfer the elements within your U.S. credit report to the one you establish in Canada, even though there are Equifax and TransUnion offices located in both countries. There are too many technological and informational differences between these two versions of your report and too much red tape to bypass.

Don’t worry, because your U.S. report will certainly remain active if you’re a dual citizen and you continue using American credit products. However, if you’re starting over in Canada, you’ll need to begin building a whole new credit history from the ground up.

Learn how to read your Canadian credit report. 

How to Build a Credit History in Canada

Since your credit report cannot move to Canada along with you, it’s essential to establish yourself as a credit user as soon as you’re settled in your new home. After all, having good credit is just as important here as it is in the United States. 

Luckily, it’s relatively easy to build a credit history in Canada. You simply have to become a regular user of credit products, which you can do by applying with any bank, credit union, or alternative financial institution, otherwise known as a lender.

Here are a few other steps you can take to become a Canadian credit user:

• Find the right lender – In Canada, most lenders report their clients’ payment activity to at least one credit bureau. While there are some institutions that don’t do this, getting approved by one that does is the only way to get a credit report created in your name. 

• Apply for a basic credit card – This is one of, if not the easiest credit product to get approved for. It’s also one of the simplest and most efficient ways of building a credit history. To reduce any risk you’re taking, try a card with no annual fee.

• Apply for a secured credit card – If you can’t get approved for a regular card, you can apply for a secured credit card, wherein a security deposit equal to the desired credit amount will be necessary to get approved. This is also a perfect product for anyone who is dealing with bad credit. Once your card expires and you’ve paid back any balances in full, your deposit will be returned.

• Avoid applying too often – If you’re denied for any credit product, always wait a few months before applying again, as a hard inquiry will be added to your credit history each time a lender checks your report. Every hard inquiry decreases your credit score by several points and makes you less creditworthy over time.  

• Make responsible payments – Whatever credit product you choose, the best thing you can do is to continually make full, on-time payments. While a credit card allows you to make minimum monthly payments, full balances are healthier for your credit score and finances.

• Diversify your credit – Once you have a solid credit history and high credit score (660-900), you will be considered more creditworthy’ when you apply for new products later on. You can then qualify for loans, lines of credit, and other larger credit products, each of which will diversify your credit report. The more products you use responsibly, the better your credit will become overall.

• Review your credit report regularly – As a Canadian credit user, you’re entitled to one free copy of your credit report each year from Equifax and TransUnion. It’s important to check both copies of your report periodically for errors or signs of identity fraud, both of which can harm your credit and finances badly.  

Building Credit in Canada: FAQs

While some credit products, including credit cards, may seem like they require little responsibility, any one of them can still have a drastic positive or negative impact on your finances and your new Canadian credit report. 

So, before you apply, it’s a smart idea to speak with a financial advisor, as well as several lenders in your area and ask them these kinds of questions: 

Will I Automatically Have Good Credit When I Get Approved?

Sadly, you are not likely to have good credit when you first become a credit user, whether you’re in Canada or the United States. In fact, it can take a few months’ worth of responsible payments to get your credit score within the 660-900 range. Fortunately, there are normally very minimal requirements to get approved for a basic credit card and you’re allowed to make multiple payments each month to quickly build credit. 

What Happens If I Don’t Make Full Payments?

As mentioned, one of the best things about credit cards is that you can also make minimum or partial balance payments to avoid any defaulting penalties. However, one huge drawback to this option is that the more unpaid debt you carry, the lower your credit score will fall and the more interest you’ll accumulate. 

What’s worse, in the case of a loan or another fixed credit product, full installments are mandatory and defaulting could result in late penalties, extra interest, and debt problems, on top of the damage to your credit score and credit report as a whole.

How Long Do Items Remain in My Credit History?

This answer depends on what kind of product you apply for, how responsibly you use it, what credit bureau you check with and which province or territory you live in. Remember, both Equifax and TransUnion have slightly different versions of your report on file. Most of the time, your credit activity will be recorded for several years. 

For example, a simple hard inquiry will remain on your Equifax report for 3 years, but a full 6 years with TransUnion. Negative information, such as defaulted payments and bankruptcies will stay there even longer, upwards of 7 years in most cases. Thankfully, both bureaus will also keep your positive information on file for many years.

Need Help Building Your Canadian Credit History?

Moving to another country can be tricky, no matter how close you are to it. Whether you’re a new or prospective resident to Canada, rest assured that Loans Canada can help you become a responsible credit user for years to come. We offer a wide variety of credit, loans, and debt relief products to help all Canadians build the financial future they want.