Improving Credit History: Strategies and Pathways for Indigenous Entrepreneurs

Credit is a fundamental component of any financial system; it enables individuals and entrepreneurs to borrow capital they do not have to build assets and participate in the broader economy. For many Indigenous individuals in Canada, however, accessing credit remains a difficult task relative to their non-Indigenous peers.

The Credit Gap: Understanding Indigenous Financial Barriers

According to the Financial Consumer Agency of Canada, an estimated 15 percent of Indigenous adults do not have access to a bank account, more than double that of non-Indigenous adults. Not only does this render one out of six Indigenous-adults incapable of accessing credit but severely limits their ability to participate in the broader economy. Having a bank account is crucial for day-to-day functions, let alone starting a business; for this reason, accessing a bank account is a protected right.

A 2024 report from the National Indigenous Economic Development Board found that Indigenous entrepreneurs often face higher borrowing costs, limited access to financial institutions, and lack of tailored financial products. In part, these disparities stem from broad structural differences in the Canadian economy, however, lower levels of financial literacy among Indigenous Canadians are also a contributing factor.

Building a strong credit history is by far the most important step to accessing reliable credit, as creditors determine the rates and fees of loans on the basis of a borrower’s credit risk. As such, demonstrating financial reliability through timely payments and responsible management is imperative for entrepreneurs if they wish to secure favourable loans.

Building Financial Literacy: Programs and Partnerships That Work

Many Indigenous communities have limited access to educational programs focused on personal finance and credit management. Fortunately, there are several organizations that have partnered with the Indigenous Chamber of Commerce, including CPA Manitoba and Futurpreneur Canada, which offer tailored financial literacy programs geared toward Indigenous entrepreneurs. These programs educate individuals about the importance of timely payments, responsible credit card usage, and maintaining a low credit utilization ratio.

Another challenge for Indigenous entrepreneurs is finding the right kind of financial institution. Throughout Canada there exists dozens of Indigenous-owned financial institutions that offer tailored services for Indigenous entrepreneurs.

IFIs: Solutions for Business Growth

Indigenous Financial Institutions (IFIs) are community-driven organizations dedicated to meeting the unique financing needs of First Nations, Métis, and Inuit entrepreneurs. Among their services are developmental lending, business financing, and tailored support services ignored by conventional lenders.

These institutions excel in risk assessment and management, enabling them to provide loans that would otherwise be inaccessible. IFIs enable Indigenous entrepreneurs to access reliable capital, grow their businesses, and foster economic development for the broader community.

Improving access to credit and building strong credit histories are vital steps toward empowering Indigenous entrepreneurs and fostering economic self-determination. By addressing structural barriers, enhancing financial literacy, and leveraging the support of Indigenous-owned financial institutions, Indigenous individuals can unlock opportunities to participate more fully in the Canadian economy.

These efforts not only benefit individual entrepreneurs but also contribute to the broader goal of economic reconciliation, strengthening Indigenous communities and driving inclusive economic growth across the country.