How Maternity Leave Affects Your Credit in Canada (And How to Prepare)

Mar 20, 202619 min read

Having a baby is one of the most joyful and financially complex events in a Canadian’s life. The arrival of a child coincides with a dramatic shift in household income — usually a significant reduction — at the exact moment when expenses are climbing. For Canadians who already carry the burden of bad credit, this combination can feel overwhelming. The good news is that with the right information and the right preparation, maternity and parental leave doesn’t have to derail your credit rebuilding journey.

Understanding Canada’s Maternity and Parental Leave System

Canada’s maternity and parental leave system is administered through Employment Insurance (EI), operated by Service Canada. It’s one of the most generous in the world — but it’s not a full income replacement, and the gap between what you earned and what EI pays is where credit problems typically emerge.

Maternity Benefits

Maternity benefits are available to the birth mother (or surrogate) only. Key details:

Duration: Up to 15 weeks
Amount: 55% of your average insurable weekly earnings, up to a maximum weekly amount
Maximum insurable earnings: $63,200 per year in 2024 (changes annually)
Maximum weekly benefit: Approximately $668/week in 2024
Waiting period: 1-week waiting period before benefits begin
Eligibility: 600 insurable hours of work in the past 52 weeks

Parental Benefits

Parental benefits can be shared between parents and come in two options:

Feature	Standard Parental	Extended Parental
Duration	Up to 40 weeks (shared)	Up to 69 weeks (shared)
Benefit Rate	55% of insurable earnings	33% of insurable earnings
Maximum Weekly Benefit	~$668/week	~$401/week
Use-it-or-lose-it weeks	5 weeks for second parent	8 weeks for second parent
Flexibility	Less flexible	More spread out

EI replacement rate — maternity and standard parental benefits

Quebec’s Different System (QPIP)

Quebec operates its own provincial program — the Quebec Parental Insurance Plan (QPIP) — which is generally more generous than the federal EI system:

Higher benefit rates (70–75% of insurable earnings for some benefit types)
No waiting period (unlike the 1-week federal waiting period)
Higher coverage for self-employed workers
Different duration options available
Available to self-employed workers from day one (federal EI requires a full year of self-employment)

Canadian Note

Quebec residents should use the QPIP estimator at rqap.gouv.qc.ca to calculate their expected benefits. Outside Quebec, use Service Canada’s EI benefits estimator at canada.ca/ei. The difference can be substantial — a Quebecker earning $70,000/year will typically receive significantly more in parental benefits than a similarly situated Ontarian.

How Income Reduction Affects Your Credit

Your credit score is calculated from information in your credit report — it doesn’t directly reflect your income. However, income reduction on leave affects your credit indirectly through several mechanisms that can cause real damage if not anticipated.

The Income-Credit Connection

While your credit score doesn’t include your income, your income affects your credit in these important ways:

1. Payment Capacity

Your most fundamental credit concern on leave is simply making your minimum payments. With 45% of your income gone (at the standard EI rate), the monthly budget that worked before may not work on leave. Missed or late payments are the most damaging thing that can happen to your credit score — a single missed payment can drop your score by 50–100 points and stays on your credit report for six years.

2. Credit Utilization

If reduced income leads you to rely more heavily on credit cards to cover everyday expenses, your utilization rate climbs. High credit utilization (above 30% of your credit limit) damages your credit score. At 60%+ utilization, the impact is severe.

3. New Credit Applications

If you need to apply for new credit during leave, lenders will see your reduced EI income on your application. This can result in denial or lower credit limits. Every hard inquiry from a credit application also temporarily reduces your score.

4. Debt-to-Income Ratio

While not directly part of credit scoring formulas, lenders manually review your debt-to-income ratio when you apply for any new credit product. On EI income, this ratio often looks unfavourable — limiting your options during leave.

Credit Resources Team — Expert Note

The credit damage from maternity leave almost always comes from one of two sources: missed or late payments because the person didn’t calculate how much their income would actually drop, or rapidly rising credit card balances because everyday expenses weren’t anticipated. Both are entirely preventable with three to six months of advance planning. The math isn’t complicated — it’s just uncomfortable to look at before you’re excited about a new baby.
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Before You Go on Leave: The Critical Preparation Window

The most important credit decisions happen before you go on leave, not during it. The 3–6 months before your expected leave start date are the window to take action.

Calculate Your Actual EI Income

Use the Service Canada EI benefits estimator to calculate exactly what you’ll receive. Don’t estimate — calculate. Take your average weekly insurable earnings over the past 52 weeks, multiply by 55% (or 33% for extended parental), and multiply by the number of weeks you expect to be on leave. Don’t forget to account for the 1-week waiting period and the fact that EI benefits are taxable income.

Build a Leave Budget Before Your Income Drops

Create a detailed monthly budget for your period on leave, based on your actual EI income. List every debt payment, utility, subscription, food cost, and baby expense. Be honest about baby costs — diapers, formula (if applicable), clothing, and childcare supplies add up quickly. If the numbers don’t work, you need to know now, not in month three of leave.

Build an Emergency Fund Aggressively

The single best protection for your credit during leave is a cash buffer. Aim for 3–6 months of minimum debt payments plus essential living expenses. Even $2,000–$5,000 saved before leave gives you enormous resilience. High-interest savings accounts like EQ Bank (2.50%+) let your buffer earn something while it waits.

Request Credit Limit Increases Now

If you might need more credit availability during leave, apply for credit limit increases before your income drops. Once you’re on EI, lenders see reduced income on credit applications and often deny increases. Requesting increases 2–3 months before leave — while you still have your full employment income — greatly improves your success rate.

Consider a Home Equity Line of Credit (HELOC) if You're a Homeowner

Homeowners with equity may want to apply for a HELOC before going on leave. A HELOC approval is based on your employment income and home equity — waiting until you’re on EI may result in denial. You don’t need to use the HELOC, but having it approved gives you a low-interest safety net if you need it.

Set Up Autopay for All Credit Accounts

Before your leave starts, set up automatic minimum payments for every credit account. This protects you from missed payments even during the most chaotic newborn months when sleep deprivation makes everything harder. If you can afford more than the minimum, set up automatic additional payments — but at minimum, guarantee your minimums are covered.

Understanding Your Employer’s Top-Up Benefits

Many Canadian employers offer Supplemental Unemployment Benefits (SUBs) — commonly called “maternity top-ups” or “parental top-ups” — that supplement EI benefits to bring your total income closer to your regular salary. The availability and generosity of top-ups varies enormously by employer and sector.

How Top-Ups Work

A top-up is a payment from your employer that, combined with your EI benefit, typically brings your total to 75–100% of your regular salary. For example:

You earn $5,000/month
EI pays $2,750/month (55%)
Employer top-up of $1,500/month brings total to $4,250 (85%)

Top-ups are common in the public sector (federal, provincial, and municipal government), unionized workplaces, large corporations, universities, hospitals, and some professional services firms. They’re less common in retail, hospitality, small businesses, and non-union workplaces.

Pro Tip

Check your employment contract, collective agreement, or HR policy manual for maternity/parental leave top-up provisions. If nothing is written, ask HR directly. Many employees don’t realize they’re entitled to top-ups — and employers aren’t always proactive about informing them. The amount and duration varies widely, so get the details in writing.

Self-Employed Canadians

Self-employed Canadians can access EI maternity and parental benefits if they’ve registered with the EI program and paid premiums for at least 12 months before claiming. However, the calculation is more complex:

Benefits are based on the lower of your self-employment income or the maximum insurable earnings
There’s an annual registration deadline of January 31 for the current year’s premium payments
Unlike employees, self-employed individuals who received EI benefits must repay the full amount if their self-employment income exceeds the maximum threshold

For self-employed individuals with variable income, the impact on credit can be particularly severe if not planned carefully. Consider consulting a financial planner familiar with self-employment income and EI at least 18 months before a planned leave.

Managing Existing Bad Credit During Leave

If you’re already working to rebuild credit when you go on leave, the stakes are higher. The progress you’ve made can be lost quickly if leave finances aren’t managed carefully — but it can also be maintained and even advanced.

Prioritizing Your Debt Payments on Reduced Income

Not all debts are equal. When budgeting on reduced income, prioritize in this order:

Secured debts (mortgage, car loan) — missing these has the most severe consequences, including loss of your home or vehicle
Credit card minimums — payment history is the #1 factor in your credit score
Utilities and essential services — disconnection affects quality of life and can trigger collections
Unsecured personal loans — important but slightly less time-sensitive than minimums above
Credit building products — secured card payments, credit builder loan payments

Communicating with Creditors Proactively

One of the most effective credit protection strategies during leave is also the least used: calling your creditors before you miss a payment, not after.

Most Canadian lenders have hardship programs that include:

Temporary payment deferrals (1–6 months of missed payments not reported to credit bureaus)
Reduced minimum payment requirements
Interest rate reductions for the duration of the hardship
Balance consolidation or restructuring

Good to Know

During the COVID-19 pandemic, Canadians discovered that many lenders were willing to offer payment deferrals without credit bureau reporting. The same programs exist outside of pandemics — they’re just less publicized. Call the number on the back of your card and say you’re about to go on parental leave and would like to discuss hardship options. You may be surprised at the response.

Maintaining Your Secured Credit Card During Leave

If you have a secured credit card as part of your credit rebuilding strategy, maintaining it during leave is particularly important. Here’s a simple strategy:

Keep one small, predictable recurring charge on the card (e.g., $20/month subscription)
Set up autopay for the full balance — this guarantees 100% on-time payments with zero effort
Don’t use the card for any purchases you’re not certain you can pay in full — this prevents utilization creep
The consistent payment history builds your credit score month by month even during the most challenging financial period

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“Having a baby is not a financial emergency — it’s a financial event. The difference is that an emergency is unexpected; a baby gives you months to prepare. The families who come out of parental leave with their credit intact are almost always the ones who planned for the income reduction honestly and in advance.”

— Laurie Campbell, CEO, Credit Canada Debt Solutions

Special Financial Considerations for New Parents with Bad Credit

The costs of a new baby can easily exceed $15,000 in the first year when all expenses are tallied. Many new parents underestimate these costs and fill the gap with credit — a pattern that can quickly become unmanageable, especially on reduced income.

Expense Category	Low Estimate	Mid-Range	High Estimate
Diapers (year 1)	$600	$1,200	$2,000
Formula (if needed, year 1)	$0 (breastfeeding)	$1,500	$3,000
Clothing	$200	$600	$1,500
Nursery furniture/setup	$500	$2,000	$5,000+
Stroller/car seat/gear	$400	$1,500	$3,000+
Medical/dental (not covered)	$0	$500	$2,000
Childcare (if returning early)	$0	$8,000	$20,000+
Year 1 Total (approximate)	$1,700	$9,800	$25,000+

Strategies for reducing baby costs without resorting to credit:

Buy used furniture and gear (car seats excepted — always buy new)
Accept hand-me-downs for clothing — babies outgrow sizes in weeks
Check your provincial benefits — the Ontario Baby Bundle, B.C.’s baby benefits, and Quebec’s various family supports can offset significant costs
Apply for the Canada Child Benefit (CCB) immediately after birth — the average payment is over $6,800/year per child under 6
If formula feeding, check for samples and programs from manufacturers
Many libraries lend toys and books — free stimulation without purchases

The Canada Child Benefit (CCB) and Your Credit Situation

The Canada Child Benefit is a tax-free monthly payment to eligible families for children under 18. For bad credit consumers, it’s an important income supplement that can make the difference between making credit payments and missing them.

Maximum annual benefit (2024–25): $7,787 per child under age 6; $6,570 per child aged 6–17
Payment calculation: Based on prior year’s family net income
How to apply: Register the birth with your province; Service Canada will contact you, or you can apply through your MyAccount at CRA
Payment dates: Monthly on approximately the 20th of each month

Canadian Note

The Canada Child Benefit is not taxable and does not affect your credit score or credit applications. However, it is considered income for the purposes of calculating EI benefits — it doesn’t reduce your EI, but some lenders will count it as household income when evaluating loan applications. Make sure you apply for the CCB as soon as possible after birth; retroactive payments are only available for 10 years, but the sooner you apply, the sooner you’re collecting.

Government Benefits Checklist for New Parents

Many eligible Canadians miss benefits they’re entitled to. Here’s a comprehensive checklist:

Benefit	Eligibility	Amount (approximate)	Apply Through
Canada Child Benefit (CCB)	All eligible families	Up to $7,787/year per child under 6	CRA MyAccount
Ontario Child Benefit (OCB)	Low/moderate income Ontario families	Up to $1,607/year per child	Automatically calculated with CCB
Healthy Babies Healthy Children (ON)	Ontario families with high needs	Services and supports	Local public health unit
B.C. Family Benefit	B.C. families under income threshold	Up to $2,188/year per child	Automatically with CCB
Alberta Child and Family Benefit	Low-to-middle income Alberta families	Up to $2,894/year for first child	CRA with CCB application
GST/HST Credit	Low/moderate income Canadians	$519+/year for a couple	Filed through tax return
Working Income Tax Benefit (CWB)	Low-income earners	Varies by income	Annual tax return

During Leave: Month-by-Month Credit Management

Parent managing household budget and finances — Monthly credit management during leave keeps your rebuilding progress on track.

The First Three Months

The first three months postpartum are the hardest to manage financially — sleep deprivation, physical recovery, and the emotional intensity of new parenthood make financial tasks difficult. This is why setting up autopay before leave is so critical.

Tasks to complete in the first three months:

Confirm your EI deposits are arriving on schedule
Check that all autopay deductions are being processed correctly
Apply for the Canada Child Benefit if you haven’t already
Do a quick monthly budget check — are you staying within your planned budget?

Signs you need to take action sooner rather than later:

Your savings buffer is dropping faster than planned
You’re using your credit card for everyday groceries consistently
Your credit card balance is growing month-over-month
You’re finding it difficult to make minimum payments

Months Four to Six

By months four to six, the financial picture of leave is clearer. You have a better sense of your actual expenses versus what you budgeted.

Credit management tasks for this period:

Pull one credit report (Equifax or TransUnion) and check for any unexpected changes
Review your credit card balances — if utilization has crept up, make a plan to bring it down
Assess whether your planned return-to-work date is still realistic or needs adjustment
If you have a credit builder loan, confirm all payments are being made on time

Months Seven and Beyond

For those taking extended parental leave (up to 18 months), the later months require a careful eye on the sustainability of your financial plan.

If you chose extended parental benefits (33% of earnings), the lower benefit amount may start to create strain
Consider whether returning to work earlier might be the right financial decision
Begin planning for childcare costs, which often exceed the cost of staying home on leave
Review your credit report monthly in the final two months before returning to work

Returning to Work: Credit Recovery After Leave

The return to full employment income is the ideal moment to accelerate credit rebuilding, address any damage that occurred during leave, and recalibrate your financial strategy for the post-baby reality.

Update Your Budget for Two-Income Reality (or New Single-Income Reality)

The household budget after a baby is different from before. Some families find that one parent returning to work barely covers childcare costs — a situation that requires honest financial reassessment. Build a new, realistic budget that accounts for childcare, child activities, and the increased household expenses that come with a child.

Address Credit Card Balances Aggressively

If your credit card balances grew during leave, make paying them down your top priority when income returns. Credit card interest rates of 19.99%–24.99% are wealth destroyers. Target the highest-interest balance first (avalanche method) or the smallest balance for psychological momentum (snowball method).

Pull Your Full Credit Reports

Within the first month of returning to work, pull your full credit reports from both Equifax and TransUnion. Review every account for accuracy. Dispute anything that looks incorrect — leave-related hardship arrangements should have been protected from reporting, and if they weren’t, this is the time to dispute.

Reapply for Any Credit Limit Increases You Need

Now that you have full employment income again, you’re in a much better position for credit limit increases or new credit products. If your utilization climbed during leave, a limit increase can help bring the percentage down quickly.

Start or Resume RESP Contributions

The Registered Education Savings Plan (RESP) offers a 20% Canadian Education Savings Grant (CESG) on contributions up to $2,500/year per child — that’s $500 in free government money annually. Even small, regular contributions benefit enormously from compound growth over 18 years. RESP contributions don’t affect your credit but demonstrate financial responsibility.

What About Credit Applications During Leave?

What if you need new credit during leave? Understanding what lenders see and how to position yourself is important.

How Lenders View EI Income

Most Canadian lenders will count EI income as eligible income for the purposes of a credit application, but with important caveats:

EI income is temporary — lenders may require documentation of your return-to-work date and employer letter confirming your job is protected
Mortgage lenders generally require you to have returned to work before approving a new mortgage (though exceptions exist)
Credit card and personal loan applications may be approved on EI income for smaller amounts
Secured credit card applications are possible — the collateral deposit reduces the lender’s risk

Warning

Avoid applying for multiple new credit products during leave. Each hard inquiry reduces your credit score slightly, and multiple denials are demoralizing and damaging. If you need additional credit during leave, focus on one targeted application with the best chance of success, or wait until you’ve returned to work.

Mortgage Renewals During Leave

If your mortgage comes up for renewal during maternity or parental leave, you have options:

Renewing with your existing lender is almost always possible regardless of employment status — you’re renewing an existing loan, not applying for a new one
Switching lenders at renewal is more complex and may require proof of return-to-work or a co-signer
Refinancing during leave is difficult — wait until you’ve returned to work if possible

If you need to switch lenders during leave and are having difficulty, a mortgage broker who specializes in alternative lending may be able to help.

Does going on maternity leave automatically affect my credit score?

No. Taking maternity or parental leave does not directly affect your credit score. Your income is not reported to credit bureaus, so EI income versus employment income makes no difference to your credit report. What can affect your credit score is what happens to your payment behaviour during leave: missed payments, rising credit card balances, or collections activity. With proper planning and autopay setup, your credit score can remain completely stable throughout leave.

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Can I get a mortgage while on maternity leave in Canada?

Possibly, but it’s challenging. Some lenders will approve a mortgage application during leave if you can provide a return-to-work letter from your employer confirming your position is protected, proof of your EI income, a strong credit score, and sufficient down payment. Default-insured mortgages (CMHC, Sagen, or Canada Guaranty) may have specific rules about income on leave. A mortgage broker can help identify lenders who are most accommodating of leave situations.

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How do I calculate how much money I’ll actually receive on EI during maternity leave?

Your EI maternity benefit is 55% of your average weekly insurable earnings over your best 14–26 weeks of the past 52 weeks (the calculation period depends on your regional unemployment rate). The maximum insurable earnings in 2024 are $63,200/year, making the maximum weekly benefit approximately $668. Use the Service Canada EI benefits estimator at canada.ca/en/employment-social-development/services/ei/ei-list/ei-calculators.html for a personalized estimate. Remember that EI benefits are taxable income — taxes are deducted at source at a default rate, which may not match your actual tax rate.

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What happens to my secured credit card deposit if I can’t afford to keep the card during leave?

If you close a secured credit card, your deposit is returned (minus any outstanding balance) within 30–60 days, depending on the issuer. However, closing a credit card also closes that credit account, which can reduce your available credit and affect your credit score — especially if it’s been open for a significant period. Before closing, consider keeping it open with minimal use and minimal or zero balance. The monthly fee for a secured card is usually $5–$15 — often worth paying to maintain the account and preserve the credit history.

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I’m behind on payments and going on maternity leave soon. What should I do?

Act immediately. Contact your creditors before leave begins and explain your situation. Ask specifically about hardship programs, payment deferrals, and any arrangements that would be reported to credit bureaus as “in good standing.” Contact a non-profit credit counsellor at Credit Counselling Canada (creditcounsellingcanada.ca) for free advice — they can often negotiate with creditors on your behalf. If the situation is severe, consulting a Licensed Insolvency Trustee is also free and might identify options like a consumer proposal that would make leave manageable.

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Does my employer have to keep my job while I’m on maternity leave?

Yes. Under provincial employment standards legislation and the Canada Labour Code (for federally regulated employees), your employer is required to reinstate you to the same or comparable position upon your return from pregnancy and parental leave. It is illegal for an employer to terminate your employment because you are pregnant or taking parental leave. If your employer violates these protections, contact your provincial or federal labour board immediately.

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Parent and baby at home with financial documents — With the right plan, your credit can survive — and even thrive — during maternity and parental leave.

Maternity and parental leave is a season of life, not a permanent financial state. With honest planning, use of available government benefits, proactive communication with creditors, and a few smart credit management habits, the vast majority of Canadians can come out of leave with their credit intact — and many come out with it improved. The key is to treat leave as the predictable, plannable financial transition it is, and to start planning long before the due date.

How Maternity Leave Affects Your Credit in Canada (And How to Prepare)