How to Build Credit as a Young Adult in Canada

Your credit score affects your ability to rent an apartment, get a car loan, qualify for a mortgage, and even sometimes get a job. Building strong credit as a young adult in Canada is one of the highest-return financial activities you can do — and the earlier you start, the better. Here is everything you need to know.

What Is a Credit Score?

In Canada, your credit score is a 3-digit number between 300 and 900, calculated by two agencies: Equifax and TransUnion. The higher your score, the more lenders trust you to repay debts. Both agencies calculate scores slightly differently, but the factors are similar.

What Affects Your Credit Score

Step-by-Step: How to Build Credit from Zero

1. Get a secured credit card or use KOHO Credit Building. A secured card requires a deposit (typically $200–$500) that becomes your credit limit. Use it for small purchases and pay in full each month. KOHO's credit building feature (free with the base plan) reports to Equifax without requiring a security deposit — perfect for students.
2. Pay every bill on time, every time. Payment history is 35% of your score. Set up autopay for at minimum the monthly minimum, but always try to pay in full.
3. Keep utilization below 30%. If your credit limit is $500, keep your balance under $150 at statement time. Lower is better — aim for under 10% if possible.
4. Do not apply for too much credit at once. Every application triggers a hard inquiry that temporarily lowers your score. Space applications at least 6 months apart.
5. Keep old accounts open. Credit history length matters. Your oldest account positively affects your score — do not close it even if you rarely use it.
6. Diversify over time. Having a mix of credit types (credit card + car loan, or credit card + line of credit) eventually helps your score, but do not rush this.

How Long Does It Take to Build Credit?

With consistent responsible behavior, you can build a "good" credit score (670+) in 6–12 months from scratch. A "very good" score (740+) typically takes 2–3 years of clean history. An "excellent" score (800+) usually requires 5+ years of diverse, well-managed credit.

Check Your Credit Score for Free

In Canada, you can check your credit score for free at:

• Borrowell (Equifax score, free, no hard inquiry)
• Credit Karma (TransUnion score, free)
• Some banks (TD, RBC, Scotiabank) provide free score access in their apps
• KOHO also shows your Equifax credit score progress

Review your report at least twice per year and dispute any errors you find at equifax.ca or transunion.ca.