Canadians are taking on more credit in response to financial pressures and uncertain economic conditions, a new report has found, with recent signs that people are increasingly struggling to make timely payments.

TransUnion’s Q4 2022 Credit Industry Insights Report found the health of Canada’s credit market has remained at pre-pandemic levels—though “delinquency,” or late payments “increased steadily over the last three quarters.”

“We are observing increased credit usage, as some consumers look to credit as a means to help stave off financial pressures,” Matt Fabian, director of financial services research and consulting at TransUnion in Canada, said in a new release.

“Lenders are beginning to increase their provision for credit losses, but they’re not stopping their growth trajectory since delinquency levels are still below what they were prior to 2020. Canada is still in a good environment from a performance perspective, but lenders would do well to monitor trends closely.”


The report assessed depersonalized and aggregated credit data from more than 29 million Canadian credit consumers. TransUnion’s report maps credit market health with its Credit Industry Indicator (CII), based on demand, supply, consumer behaviour and performance. The report said Canada’s CII rose four points year-over-year in December 2022 to 105, staying in the pre-pandemic range.

Much of the increase was driven by high credit participation and larger consumer balances, the report said.

Credit participation rose in all provinces and Ontario saw the highest increase of credit-active consumers at 3.2 per cent, as borrowers looked for “a range of credit products” to cope with financial pressures.


The increase in the report indicator was offset by declines in retail spending and increases in delinquency. After years of healthy credit performance during the pandemic, the report said people are now facing “payment shocks” amid the high inflation, high interest rate economic environment that has driven up monthly payment amounts.

Consumer-level “serious delinquency,” defined in the report as payments 90 days or more past due, increased 11 per cent year-over-year in the last quarter of 2022, rising to 1.51 per cent. Delinquency was increasing over the last three quarters, with most of the increase seen in recent months with unsecured credit products.

The report noted “overall delinquency levels” were below pre-pandemic levels, and suggested credit lenders should look for early warning signals and work with consumers to “prepare less costly recovery strategies.”

Total outstanding balances reached a record high in the last quarter with a year-over-year increase of 6.8 per cent to $2.3 trillion. The report said that increase was driven by high average credit card and mortgage balances per consumer.


Younger consumers drove originations, or new credit products, the report found. Gen Z originations growing 20 per cent year-over-year and millennial originations growing 10 per cent.

Gen Z consumers born in 1995 or later were the fastest-growing cohort adopting credit, with nearly 19 per cent starting to borrow--though the report attributed most of the increase in that cohort to more people reaching credit-eligible age. Millennials also saw a four per cent increase in the number of credit-active people.


Mortgage originations declined 18 per cent year-over-year, the report said. Demand for mortgage refinancing has dropped with recent interest rate changes, as “most consumers who were eligible for refinancing have already taken the opportunity to do so.”

Real estate prices are declining, the report said, but interest rate hikes have driven up minimum payments and “put Canadian homeowners under even more pressure,” with mortgage payments increasing an average 17 per cent from a year earlier.