Credit is one of those things that feels like it shouldn't matter — until it does. Need to rent an apartment? They check your credit. Want a car loan? Credit. A phone plan? Credit. Even some jobs look at your credit history.
Understanding how it works puts you in control. Ignoring it gives that control to someone else.
Why many Indigenous people avoid credit
There are real, historical reasons for distrust. Financial institutions have not always treated Indigenous people fairly. Predatory lending in communities, refusal of services, paternalistic financial "education" that felt more like control — the wariness isn't irrational. It's learned.
But here's the thing: credit is a tool. Like any tool, it can be used well or poorly. Understanding how it works doesn't mean you have to use it. It means you get to choose on your own terms.
When you have strong credit, you negotiate from a position of power. You choose whether to take on debt. You get better rates when you do. Nobody gets to tell you what you can or can't access. That's sovereignty applied to personal finance.
What a credit score actually is
Your credit score is a number between 300 and 900. It's calculated by two companies — Equifax and TransUnion — based on your borrowing history. Higher is better.
- 300-559 — poor (limited options, higher interest rates)
- 560-659 — fair (some options, rates won't be great)
- 660-724 — good (most approvals, reasonable rates)
- 725-759 — very good (best rates from most lenders)
- 760-900 — excellent (best rates available anywhere)
You can get your credit report free, online, from both bureaus directly — and apps like Borrowell (uses Equifax) or Credit Karma (uses TransUnion) show a free score. Checking your own report or score does not lower it.
How your score is calculated
The exact formulas aren't published, and they differ between bureaus and lenders. But Equifax describes the rough weighting, and the order of what matters is consistent everywhere:
- Payment history (roughly 35%) — do you pay on time? This is the biggest factor by far. Even one missed payment can drop your score significantly
- Credit utilization — how much of your available credit are you using? FCAC suggests using less than 30% of your total limit. If your credit card limit is $1,000, that means keeping the balance under $300
- Credit history length — how long have your accounts been open? Longer is better. Don't close your oldest credit card
- Credit mix — having different types of credit (credit card, line of credit, car loan) helps slightly
- New credit inquiries — applying for lots of credit in a short time lowers your score temporarily
Your utilization
Put in one card's limit and what is on it. The bar shows where you sit against the 30% FCAC suggests aiming for.
Credit utilization is recalculated every month based on your statement balance. If you normally charge $800 on a $1,000 limit card (80% utilization), your score takes a hit every month.
Quick fix: pay down your balance before the statement date, not just before the due date. If your statement closes on the 15th, pay on the 14th. Your reported utilization drops immediately, and your score can jump 20-50 points within a month or two.
Another option: ask for a credit limit increase. If your limit goes from $1,000 to $2,000 and your spending stays the same, utilization drops from 80% to 40% without changing any habits.
Building credit from zero
If you've never had credit — no credit card, no loans, nothing — you have a "thin file." That's not bad credit. It's no credit. Here's how to start:
Option 1: Secured credit card
You give the bank a deposit (say $500), and they give you a credit card with a $500 limit. Your deposit is your safety net — the bank has no risk. Use the card for small purchases, pay it off every month, and after 6-12 months you'll have a credit history.
Option 2: Become an authorized user
If a family member with good credit adds you as an authorized user on their credit card, their payment history on that card starts building your file too. You don't even need to use the card.
Option 3: Credit-builder loan
Some credit unions offer small loans specifically designed to build credit. You make fixed payments over 6-12 months. The money goes into a locked savings account and is released to you at the end. You build credit and savings at the same time.
On-reserve credit building has unique challenges. Many reserve addresses aren't recognized by standard address verification systems, which can cause application rejections. If this happens:
Apply in person at a branch rather than online. Bring your Status card and another piece of ID. In-person applications can often bypass address verification issues.
Use a band office mailing address if your home address isn't recognized by the system. This is common and accepted.
Credit unions in your region may be more familiar with reserve addresses and more flexible in their processes.
Repairing damaged credit
If your credit has taken hits — missed payments, collections, high balances — it's not permanent. Credit can be rebuilt. It takes time, but the process is straightforward.
- Get your credit report — request free copies from Equifax and TransUnion. Look for errors. Dispute anything that's wrong
- Stop the bleeding — get current on all payments. Set up minimum auto-payments on everything so nothing else goes late
- Pay down balances — focus on getting credit card utilization below 30%. If card debt is part of the picture, the Debt Planner shows what each extra payment buys you
- Don't close old accounts — even if you're not using a card, keeping it open helps your average account age
- Be patient — late or unpaid accounts stay on your report for up to 6 years, then fall off. Every month of on-time payments improves your trajectory
Companies that promise to "fix" your credit for a fee are almost always a waste of money. Anything they can do, you can do yourself for free. Disputing errors with Equifax and TransUnion costs nothing. The only thing that truly repairs credit is time and consistent payments.
Using credit wisely
Once you have credit, the goal is simple: use it, don't let it use you.
- Pay the full balance every month — if you can't, pay more than the minimum. Credit card interest (20%+) is the most expensive debt most people carry
- Don't carry a balance to "build credit" — this is a myth. Paying in full builds credit just as well and costs you nothing in interest
- Set up auto-pay for minimums — even if you plan to pay more manually, auto-pay on the minimum ensures you never miss a payment
- Ignore credit limit increases you don't need — a higher limit is only useful if it lowers your utilization. If it tempts you to spend more, decline it
You don't need five credit cards. One card used for regular purchases — groceries, gas, phone bill — paid off monthly, is enough to build and maintain excellent credit. Keep it simple.
Last updated August 2026
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