7 min read

Building your Credit Score

Written By

Erik Helin

Rounding it up

  • Trying to build your credit score? Start by applying for a credit card geared towards those with little or no credit — and use it responsibly.

  • Alternatively, sign up for a secured credit card, which is designed to help establish or rebuild credit, as long as you put down a security deposit.

  • You should also choose a mobile phone plan that reports credit, and always pay the bills on time.

  • If you can, get a cosigner or enter a joint credit account so you can borrow someone else’s credit standing to build your own. Just make sure you trust this person!

  • Lastly, open a bank account and establish trust with the bank so they’re more inclined to give you a line of credit or credit card.

Credit is a total double-edged sword. It’s convenient and enticing because it feels like free money, but misstep with your credit and you could be hit with all kinds of financial headaches in the future.

And without credit, it’s nearly impossible to get credit. Yep, you read that right. It’s like applying for an entry-level job that requires five years’ experience.

In order to qualify for most credit cards or other loans, it’s necessary to have an established credit score that enables a bank or other lender to determine your risk as a borrower. The logic is downright frustrating; which is why we’re here to help.

Whether you’re a newly minted adult, or a newcomer to Canada, you may not have any established credit. Here are five things you can do right now that can help you build your credit rating and serve as the foundation for your financial future.

How to build credit without a credit card?

While credit cards are popular tools for establishing credit, not everyone is comfortable with their associated risks, or the ability to obtain one. This could be particularly relatable if you've had past financially difficult experiences. The good news is - alternatives exist. You can build credit without a credit card, and below provided are some effective strategies you can utilize.

1. Get a Credit Builder Loan

Credit builder loans are specifically designed to help individuals build credit. Offered by some Canadian banks and financial institutions, the way it works is quite unique. Once the loan is granted, the lender holds the funds while the borrower makes payments towards the loan. Once the loan is fully paid off, the funds initially held are released to the borrower. This helps establish a record of timely payments, which is critical for building credit.

2. Use KOHO's Credit Building Option

KOHO offers an affordable and interest-free Credit Building tool. This feature is designed to help individuals build or rebuild their credit history in Canada. Being user-friendly, it requires no deposit, credit checks, or applications. The best part? You’re guaranteed approval. KOHO users see an average credit score increase of 22 points after just 3 months of using Credit Building.*

3. Report Regular Payments to Credit Bureaus

Certain payments you make regularly each month, like your rent and utility payments, can be reported to credit bureaus to establish your credit. For these payments to be included in your credit history, this service needs to be requested from your landlords or utility providers, as it's not commonly done. Not all credit bureaus may acknowledge these reports, but it's still worth the effort.

4. Take Out and Repay a Small Personal Loan

Small personal loans can be another method to build your credit history. Often seen as less risky compared to credit cards, these loans are repaid over a set term to the creditor, demonstrating your ability to manage and repay debts. Ensure that your lender reports to credit bureaus in Canada to maximize its impact on your credit.

5. Use a Rent Reporting Service

Some companies in Canada offer rent reporting services, which report your rent payments to the credit bureaus. These services can be particularly helpful for young adults or newcomers to Canada. While again, not all credit bureaus may acknowledge these reports, it can still boost your credit history.

6. Choose a mobile phone plan that reports credit



There are a number of small things many of us don’t even think about that can have a big impact on our financial futures. Choosing the right mobile carrier, for example, is one of those things that can help establish credit by doing something you’d be doing anyway. I mean, we all have cell phones, why not choose one that helps build your credit score?

Many Canadian cell phone carriers will report post-paid cell phone bill history to credit reporting bureaus. So this isn’t an option if you’re someone who uses prepaid cell phones. But if you have a cell phone plan where you’re making monthly payments, those payments can help you establish your credit score. When you’re setting up your cell phone plan, check with a customer service agent to confirm that your bill activity is being reported, because this fact isn’t always apparent when you first set up your plan.

And, again, much like a secured credit card, it’s imperative that you’re paying your cell phone bill in full and on time. If you’re opting for a cell phone plan specifically because it can affect your credit score, you want to be sure that the effects are all positive. Drawing recurring bill payments from a prepaid Mastercard like KOHO can be a huge difference maker; by setting up automatic payments with KOHO, you’re guaranteed to have your bills paid on time, which will help build your credit rating.

"Many Canadian cell phone carriers will report post-paid cell phone bill history to credit reporting bureaus."

7. Get a cosigner or a joint account

This option may not work for everybody, but it can also be a shortcut to establishing credit for yourself. Having a cosigner (that you trust, of course) on a credit card can help you borrow on someone else’s credit standing to build a credit history of your own.

For example, entering a joint credit agreement with your parents or another close relation can give you the benefits of their responsibility, reflected in your credit score. Let’s say you and your parents start a joint credit card account together; you all get cards based on whatever credit limit they’re eligible for. Your parents use the card regularly and pay their bills on time (and maybe you have the credit card for emergencies). Those regular payments reflect positively on your credit, because the account is also in your name.

This type of arrangement requires trust on both sides; your relative or close friend has to trust that you won’t overspend on the card, and you have to trust that the primary account holder will pay the bills on time. But hey, you’re reading this article, so you’ve already proven you’re serious about your financial future, right?

What’s great about cosigned or joint accounts is you can set them up when you’re young. Even if you never touch the account, you could have a credit card that’s been accruing regular payments from the time you’re 18 years old, and by the time you’re going to get your own credit card at age 23, for example, you would’ve already had five years of established credit. The major credit bureaus TransUnion and Equifax take into account length of accounts when making credit score determinations, so you benefit from that longevity.

8. Open a bank account and build a relationship

This is sort of abstract, but oftentimes when we talk about credit scores we’re thinking of ourselves reduced to numbers on a page. We imagine an anonymous bank manager sitting in an office, reading our credit report and stamping a big red “Denied” stamp on our loan application. In reality, there are actual, personal considerations that can factor into our finances and credit.

Opening a bank account can develop a rapport and history with yourself and that institution. If you create a savings account with a bank, you’re demonstrating to them your ability to, well, save money. You’re also giving them a clearer overall picture of your finances. By establishing this trust, a bank may be more inclined to give you a line of credit or issue you a credit card, regardless of your history.

Additionally, by working with your bank, you’re able to speak to financial experts who can help guide you towards steps you can take to help build credit that make sense to your specific financial situation.

Wrapping it all up

Credit scores might seem untouchable and a little random at first glance, but there are real, actionable steps to improve yours over time. It just takes a little patience and consistency. Keep up the good work!

*Credit scores are based on complex models involving a variety of factors. Consistent on-time payments help improve credit scores. Missed or late payments may cause credit scores to decrease. Outcomes may vary among users.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!