How To Build Credit In Canada As A Refugee

When refugees settle in Canada, they’re often doing so after experiencing times of extreme hardship, like war, persecution or years spent in refugee camps. Afterwards, they may need some help settling into a new home, which is true whether you’ve been granted protection from the Canadian government or resettled from overseas.

While the government offers many services to make their transition to Canada easier, refugees also have to build credit histories if they want access to credit during their settlement. Building credit can help refugees gain access to affordable credit products and help them finance necessary purchases such as a car.

Ways To Build Credit As A Resettled Refugee

No matter where you live, having a good credit history is necessary in order to qualify for credit in the future. Don’t worry, as a resettled refugee and permanent resident of Canada, there are some easy products that you can use to build credit, including:

Secured Credit Cards

A secured credit card gives you access to credit in exchange for a security deposit (equal to your credit limit). Secured credit cards are a great option as approval is guaranteed so long as you can provide the minimum security deposit. Credit, income and debt have no impact on your eligibility.

Once you get a secured credit card, you can use it to make purchases like a regular credit card. Your lender will then report your repayments to one or both of Canada’s credit bureaus; TransUnion and Equifax. Making responsible payments will help you build a positive payment history which should help you build better credit.

Once you’ve built your credit, you can switch to a regular credit card. To cancel your current card simply contact your provider and make sure you’ve paid off any balance on your card. Once you cancel the card, your deposit will be returned.

Best Secured Credit Cards

	Annual Fee	Interest Rates	Min. Deposit
Refresh Financial Secured Visa	$12.95	17.99%	$200	Learn More
Neo Secured Card	$0	19.99% – 24.99%	$50	Learn More
Plastk Secured Visa Credit Card	$48 (+$6 monthly fee)	17.99%	$300	Learn More
Capital One Guaranteed Secured Mastercard	$59	19.8%	$75	Learn More

Cell Phone Payments

Many cell phone providers will offer you a service plan, even if you don’t have a credit history. This makes it an easy option to build credit as many cell phone providers also report your bill payments to Equifax and/or TransUnion. For this to work, you’ll need to sign up for a monthly post-payment plan (rather than a prepaid plan).

Do note, that not all cell phone providers report bill payments, so be sure to ask your provider if they report payments before signing up for their service.

Fido	Fido reports payments to Equifax and TransUnion after each billing cycle.
Koodo	Koodo reports payments to Equifax and TransUnion after each billing cycle
Telus	Telus reports payments to Equifax and TransUnion periodically
Rogers	Rogers reports payments to Equifax and TransUnion after each billing cycle.
Bell	Bell may or may not report your payment activity to the credit bureaus.

Rent Payments

While rent payments are largely unreported, you can have your rent payments reported to Equifax through the Landlord Credit Bureau (LCB). The LCB is a platform that allows landlords to report a tenant’s rent payment to the credit bureau. Both you and your landlord must create accounts with the LCB in order to report your rent payments, so be sure to ask your landlord if they’re willing to do so before signing a lease.

You can also have your rent payments reported to the credit bureaus by using your credit card to pay your rent. While most landlords don’t have the capability to process your credit card payment, you can use third-party platforms like Plastique and RentMoola. Using your credit card will not only help you build your payment history but you can also earn points through your credit card.

Fee	Types of Credit Card	Types of Credit Card
RentMoola	0.99 – 3.99%	Visa, Mastercard, Amex, Union Pay
Plastiq	1%-2.85%	Visa, Mastercard, Amex, Discover, Diners club

Car Loans

A car loan lets you finance a vehicle and build credit at the same time. In this case, you’ll borrow a specific amount of money, use it to buy a car and repay your debt in installments. The lender then reports those payments to the credit bureaus.

Getting a car loan is often possible even if you have bad or no credit as the loan is secured against the car. However, do note, that lenders and auto dealers that approve clients with bad or limited credit normally charge higher interest rates and fees.

Bank Products Designed For Newcomers To Canada

Whether you’re a new immigrant or a resettled refugee, there are many banks and lenders that offer credit products that are exclusively designed for new Canadian residents, such as special credit cards, loans and car financing plans.

To access those products, you’ll usually have to sign up for a basic banking package that features a free or low-cost chequing account (another good financial tool for resettled refugees).

Mortgages For Newcomers	Learn More
Loans For Newcomers	Learn More
Credit Cards For Newcomers	Learn More
Newcomers Guide To Canada	Learn More

More Tips For Building Good Credit As A Resettled Refugee

If you’re planning on using credit products as a new Canadian resident, there are a number of important steps you should remember to take, including but not limited to:

Monitor Your Credit – Every Canadian can request one free copy of their credit report a year from Equifax and TransUnion (other copies cost a small fee). Many third-party companies also offer free credit monitoring but may not show a totally accurate version of your credit scores. Either way, monitoring your credit report is the best way to spot errors, track your payment history and maintain good credit.

Pay Your Bills Responsibly – If you pay credit-related bills on time and in full, your credit scores may rise and improve your credit history. Unfortunately, the opposite occurs when your bills are late, incomplete or missed. While paying your minimum monthly credit card balances saves you from penalties, it means more interest will be added to your debt and isn’t a great habit for your credit.

Limit Your Credit Applications – It’s not good to apply for a lot of credit at once either. Not only can this put you in bad debt, but your credit scores may also drop each time a potential lender checks your credit (this is known as a hard inquiry). Since most activity stays on your credit report for years, some lenders may also see multiple credit applications on your history and decide that you’re too risky to approve.

Can You Get A Loan As A Refugee?

Yes, if you’re a permanent resident of Canada, you can qualify for the same kinds of loans as Canadians. That said, the government will not consider refugees who are claiming asylum as “protected” persons or grant them permanent resident status until their claim is accepted by the Immigration and Refugee Board of Canada (IRB).

Once your asylum is approved, the IRB will send you a formal document or letter that proves your citizenship. Both of these documents can be used as proof of residency:

Confirmation of Permanent Residence – If you’re a protected person who has been chosen in a foreign country and resettled in Canada as a refugee, you’ll get this type of document, along with your Permanent Resident Card shortly after.

Verification of Status – If the government considers you a protected person due to a positive Pre-Removal Risk Assessment, you’ll obtain this document instead.

Unless you’re a protected person and permanent resident, it could be really tough to qualify for a loan in Canada, because most lenders won’t take applicants who are considered risky. The reasoning behind this choice is due to the possibility that they will suddenly leave the country and default on their payments.

Additional Reading

Building Credit In Canada As A Refugee FAQs

What’s the difference between refugees and immigrants?

An immigrant is a person who’s departed their country voluntarily to settle in another, which means they have the option of going back when they want. However, refugees are forced to flee their country permanently because they have a viable fear of being persecuted, so they are unable to return home and must seek protection elsewhere.

How long do I have to wait before I can use my credit history?

As a resettled refugee, it can take a lot of time to accumulate a solid credit history. Some lenders and financial institutions won’t even take you on as a client until you’ve got at least 18 months worth of positive credit activity to show on your credit report. Though your approval chances may also rely on your income, other factors also come into play. For example, assets and the ability to provide a down payment or security deposit, having good credit scores of around 660 – 900 are equally important to many credit providers; especially banks and credit unions.

How can I obtain my credit report?

As mentioned, Canadian credit users are entitled to one free yearly copy of their credit report from Equifax and TransUnion. Each bureau has a slightly different version of your report on file, so be sure to check both copies on a regular basis. Private companies like Borrowell and Credit Karma offer free credit reports too, however, they may not be as detailed. Keep in mind that you’ll have to pay a fee to see your credit scores from either bureau. Otherwise, you can get your credit report by submitting a request online or by phone. A physical copy could take a few days to arrive in the mail but you should be able to get a digital copy right away. Spacing out your requests is another easy way to spot errors.

Does the government offer support for refugees?

The Canadian government offers several types of support for refugees, like the Refugee and Humanitarian Settlement Program (for people seeking protection outside Canada) or the In-Canada Asylum Program (for people making refugee protection claims inside Canada). Certain provinces (such as Quebec) provide these kinds of protection as well. Once you’re considered a protected person (instead of an asylum claimant) and have received your Confirmation of Permanent Residence or Verification of Status document, you can start building your credit history and applying for various credit products.

Trying To Build Your Credit History As A Refugee?

It’s definitely not an easy task but building a good credit history is essential if you plan on applying for a credit card, loan, line of credit or mortgage in Canada. To do so, you’ll need to obtain the status of a protected person first. Contact the federal government for more information about our country’s refugee protection and financial programs today.

Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and traveling the world in search of the coolest sights our planet has to offer. Bryan uses the BMO Cash Back Mastercard to earn cash back on everything from boring bill payments to exciting excursions. He is also a strong saver, holding both a TFSA and an RRSP account in order to prepare for his future while taking full advantage of tax benefits.