Bridging the Gap for Canadian Newcomers and Their Credit

Relocating to a new country brings a host of challenges for immigrants starting anew. Whether it’s searching for new opportunities, seeking asylum, or simply exploring the world, finding oneself in a new environment can be daunting — especially if financial access, stability, or tools necessary to succeed are lacking.

Canada is welcoming thousands of newcomers every day. In the two-year period between 2021 and 2022*, 830,000 people became permanent residents, and the country plans to welcome a historic number of new Canadians in the years to come.

Building a new life in a new country can come with financial challenges.  For each of these lives, building a credit history is one of the first — and most important — achievements. As these individuals are on their journey to building a new life, unique solutions are required to ease the burden.  

It is estimated that more than 3 million Canadian people aged 18+ are “credit invisible,” meaning these individuals either do not have a credit file or the credit information on file is insufficient to generate credit scores. An additional 7 million may have two or less credit accounts on their credit file, meaning they are considered to have limited credit history, or are classified as having a “thin” credit file†. 

Immigrants and individuals that are “credit invisible,” or have limited credit information on their file, may have difficulty accessing credit products and housing, and may pay higher interest rates which can perpetuate a cycle of financial stress.

 

 

Equifax Canada research shows that new-to-Canada consumers experience score increases over time. On average, credit scores can increase by more than 10 points within the first two years for immigrants as they build more credit†. This population’s credit score history consistently improves over time.

When “credit invisible” or “thin credit file” consumers establish their first account, they integrate into the Canadian credit ecosystem and begin to build their credit history. Leveraging new and innovative methods, like pairing traditional credit data with telecom data, for example, helps shed new light on these individuals, opening financial opportunities they need to build a life.

Telecom data is a great example of a ubiquitous alternative data source. With nearly 94% of Canadians using mobile internet^, leveraging payment history can be an excellent example of a consistent payment history not found in traditional credit reporting.

Solutions like Score Complete from Equifax use alternative data to provide an assessment of a consumer's likelihood of defaulting on payments. This solution was designed specifically to help provide deeper insights for individuals like newcomers who have limited credit histories.

Finding financial opportunities for unbanked or underbanked populations is core to Equifax’s mission. Partnering with lenders to offer alternative data solutions that help more people get the things they want and need is part of our commitment to driving a more-inclusive financial ecosystem. Visit equifax.com/financialinclusion to learn more about our efforts around financial inclusion.