Build A Good Credit History in Canada

Build A Good Credit History in Canada

Michael Zimmer Published:
October 22, 2022

The term “credit” may become widely used after coming to Canada as those who have credit are able to buy products and services with the intention of paying for them later.

Bank-issued credit cards are the most popular way to obtain credit but getting one might be challenging for newcomers as most banks only accept clients who have a history of good credit. Nevertheless, most banks in Canada facilitate credit to newcomers without having a credit history, provided they provide documentation that prove they are a new immigrant.  Some of them are:

This facility may not be available for international students. This helps many improve their Canadian credit history, but the issued credit instrument must be used cautiously to maintain a high credit score.

 

Which credit card?

The appropriate credit card is determined according to what requirement the client might have. Some credit cards have low annual interest rates (less than 19.99%) while others have little to no annual fees for purchases made but, some credit cards also provide benefits like cash back through which clients receive a portion of the money that they have already spent on the purchases.

 

Credit score | What is it?

Credit score is a numerical indicator of an Individual’s financial situation that is used to reveal the credit risk about an individual to the lenders and the probability of receiving timely bill payments. Credit scores in Canada are typically ranged from 300 to 900 with higher numbers being preferred.

An individual’s credit scores are affected by various aspects like:

  • Payment history, a prominent part of credit score, is used to track the record of timely credit card and bill payments. The most effective way to maintain a good credit score would be to make timely payments on all the bills or at least make payment of the minimum amount on time.
  • Credit should be utilized only once a customer has arrived in Canada and frequent Account activity such as opening many credit accounts within a short period of time might have an negative impact on the credit ratings.
  • The Length of the Credit History contributes approximately 15% of the overall score, if the credit card is in use and the payments are made on time, a high credit score will be maintained.

If credit scores are pulled too frequently it could lead to a reduced score. The credit report records every request a money lender makes to view the report. Multiple and frequent enquiries show lenders that the individual needs fast financing and that money is not being governed efficiently.

 

Points to consider for maintaining a good credit score

  • Make sure all bills are remitted on time.
  • Try to make full and complete payments.
  • Apply for a credit card to build a credit history.
  • Stay below credit card spending limits.
  • Check the monthly account statements for accuracy and report if any discrepancies found as soon as possible.

 

Speak to your consultant to know more about banking in Canada. Check out Owlspriority Immigration’s Canada Settlement Resources to learn about finding employment in Canada, making your initial days stress-free, etc.

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