Repair your credit using the Canadian Credit System

Good news! The Canadian Credit Bureaus keep separate information, from the American big 3 (Equifax, Experian, Trans Union) credit bureaus.  Legally, you cannot use your American social security number to open Canadian credit card accounts (& vice versa).  What this means is that if you are determined enough, you can legally set up a credit file in Canada.  In this process, you will also be able to obtain other important items such as Canadian bank accounts (this is a great way to keep funds for things such as online poker).

As an American, setting up a Canadian credit file won’t help you obtain mortgages but you can pretty much do everything else.  You can also use this strategy to eventually lease a Canadian vehicle as well (as long as you don’t mind having a vehicle legally registered and insured in Canada).  Because of the geographic proximity to US, this is a great backdoor method to getting a car financed if you have bad American credit.

By setting up a Canadian identity, you will have all the benefits of credit again (i.e. department store cards, major credit cards, automobile leases, etc).  If performed correctly, you can let your Canadian credit file age and improve, while negative items slowly fall off your American file.

The reason this “works” is not because of any loopholes, but rather you are taking the advantages of a separate financial system.  In the US, everything is tracked to your SSN (Social Security Number), while in Canada this is known as the Social Insurance Number.  This is similar to the whole idea of using EIN numbers to apply for credit, except that this is legal & really works.

This is no different than if you were to setup an identity and use any other foreign financial system (i.e. such as Mexico or Europe).  The biggest advantage to the Canadian system is the close geographic proximity to the United States, and virtually interchangeability.  Having good Canadian credit is almost has good as having a solid American credit file, less the whole mortgage issue.

In order to set yourself up in Canada, you will need to do a few things first.  The process is somewhat long and cumbersome, as you are reverse engineering the entire process.  This backdoor strategy into the Canadian Credit system works, but should only be attempted by those who really need it (due to the number of indirect steps you need to take, and the time involved will be at least six months).

You must first obtain a Canadian Social Insurance number. First, you will have to apply for a Study Permit Outside of Canada. 

Having a study permit, will allow you to apply for a Social Insurance Number (the equivalent of a U.S. SSN).  In order to apply for a study permit, you will first need to be accepted to study in Canada.  This is not as hard as you may think.  As long as you have your American educational credentials you can apply online to a Canadian educational institution).  Once you have your acceptance letter Canadian from a Canadian school, you can use that to apply for a study permit, which will in turn let you apply for a Canadian Social Insurance Number.

Once you have your Canadian SIN, you are 80% of the way there, in terms of being able to apply for Canadian Credit with a clean history file.  In fact, you may even be able to apply for and get Canadian Student credit cards, by virtue of being an accepted Canadian student : )  This is similar to the offers which American Credit Card companies (campus credit cards).

Once you have your Canadian SIN, school acceptance letter, you are ready to move onto the next steps of applying for bank accounts and credit cards.  The next steps will involve establishing residency, and proof of residency (i.e. utility bill, etc).  If you are creative, this will be fairly simple.  You can establish a “place to live” in Canada pretty cheaply if you are smart.  Simply look through the classified ads, and find the lowest priced rental in Canada (it does not really matter where, as long as the price is right—if you get my drift).

Once you have acquired a residential address, you can now obtain a bank account.  If you need a utility bill, you can offer your new Canadian roommate to put the utilities in your name.  With a legal address, a utility bill, Social Insurance Card, and work permit you are now pretty much a bonafide temporary resident.  Since you are starting with a new credit file you will obviously have to start with the low hanging fruit (i.e. start apply slowly for cards at department stores, dispute inquiries to remove them and clean them off your Canadian file, etc).  If you need employment, that should not be that hard to achieve.  If you are creative, you can probably even “employ yourself”.  Over time, if you manage your Canadian credit file properly you should be able to achieve some larger credit lines.