Will Bad Credit Follow Me to Canada?

Reader Question:

Lee,

I am getting married next month and moving to Canada. I have horrible credit and was thrilled at the idea of getting a fresh start in a new country. But then I found out that the credit reporting agencies are the same in Canada as they are in the U.S. Does this mean my bad credit is going to follow me to Canada? I don't want to mess up my fiance's good credit because of my past mistakes. Help!

Miranda B. 


Miranda,

You're right about the fact that both Transunion and Equifax provide credit reports in Canada as well as the U.S. (Experian no longer maintains a Canadian reporting branch) but you can rest easy, the Canadian and U.S. branches of Equifax and Transunion don't swap information and you will get your fresh start. Let me explain...

American credit reports are primarily tracked using Social Security numbers. Canadians don't have Social Security numbers, they have Social Insurance Numbers. Merchants cannot use a Social Security number to pull a Canadian credit report or use a Social Insurance number to pull an American credit report.

Now, I dare you to walk into any bank in your area, ask for the bank manager and ask if they can pull a Canadian credit report. The bank manager is going to tell you yes. Why? Because he's thinking along the same lines as you – the credit bureaus are the same, so its got to be possible. But it isn't. Every bank manager, and I do mean every bank manager (and loan officer, and mortgage lender...yada yada) will argue until they are blue in the face that it can be done. And every one of them would be wrong.

Back in 2009 I participated in an nationwide survey of 17 major banks on just this subject. Every individual I spoke with said they could pull a Canadian credit report by plugging the applicant's Social Insurance number into the system. It failed every time. Here's why: The American and Canadian credit bureaus are set up differently. The data that appears on your credit report in the U.S. won't show up on your credit report in Canada. The credit bureaus are the same, but the computer systems are different enough to prevent information from being exchanged back and forth.

Bad credit in the U.S. doesn't transfer to Canada

This may seem illogical, but it benefits the credit bureaus. Can you imagine what a mess it would be if information were interchangeable? Can you say international lawsuits galore? It's in the credit bureaus' best interest to keep everything separate.


After you get married and obtain permanent residency in Canada, you will be assigned a Social Insurance number. Then, and only then, can you begin building a credit report with our neighbors to the north. Keep in mind that if your current creditors are aware of the fact that you are no longer in the country, the information on your credit report will be "tolled" (i.e. "frozen") and won't age off your credit report. Should you ever return to the U.S. to live, the bad credit you left behind will be there waiting for you.

Oh, and one more thing – even if you were to get married  here and remain in the U.S., your fiance wouldn't "inherit" your bad credit just by marrying you. Neither American nor Canadian credit reports merge when you marry. The only accounts of yours that would appear on your fiance's credit report after you marry would be joint accounts that the two of you share, like a mortgage or joint credit card.

So to make a long story short, no, your bad credit won't follow you when you move to Canada. You'll get to start from scratch and build a brand new Canadian credit history. And congratulations on your upcoming marriage.

Best of luck,
Lee


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