<-- !Begin Adoric Script -->

I’m New To Canada – Tips To Build Your Credit History Fast

Establish credit in Canada for new immigrantsIf you’re one of the 250,000 people who immigrated to Canada this year, welcome! Aside from acclimating yourself to a new country, home, and job, you’ll also quickly realize the benefits of building a credit history with a strong credit score.

Whether you’re looking to lease a car, buy a home, get a cell phone, or get a credit card, your going to want to start building a credit history right away to get access to lending products at the best rates available. Here are a few tips to help you get started:

  1. Apply for an unsecured credit card: Apply for a Canadian credit card as soon as possible. Many of the big banks offer new immigrants a credit card with a low line of credit as part of their initial banking package, such as Royal Bank’s “Welcome to Canada” package or Scotia’s “Start Right” program.  Once you get your credit card, start using it right away.
  2. Apply for a secured credit card if need be.  A secured credit card requires you to put money on deposit with the credit card issuer as collateral in the event you default on your credit card balance. Not every person will be eligible for an unsecured credit card without a credit history, this is especially true of older adults. Also, if you’re looking for a credit card with a larger line of credit, you’re best bet may be a secured credit card. The advantage of using a secured credit card, over a debit card, is that your repayment habits will be reported to the credit bureaus, allowing you to build that all important credit history.
  3. Apply for a mobile phone. Some phone carriers, like Telus, specifically state that no credit history is required to get an account, and that they will report your post-paid subscription to the credit bureaus. While you may be tempted to get a pre-paid plan, a post-paid plan will help you build a credit history.
  4. Pay your credit card bill on time. Whether paying the minimum or more, make your credit card bill payments on or before the due date. 35% of your credit score is based on payment history. If you’re late, even by an hour, your credit history will be negatively impacted. Paying on time does not mean paying your entire balance. Paying on time means paying at least the monthly minimum payment, which is shown on your credit card statement. Understand how long you have after receiving your credit card bill to make your payment, called your grace period. It’s usually around 21 days. To help you pay on time, you can set-up automatic monthly payments through your bank account.
  5. Pay off your balance in full each month. While carrying a balance and making your payments on time will help your credit history more than paying in full each month, we would never recommend carrying a balance just to build your score. Using your credit card and paying it off every month will help build your credit score as well, just not as fast. But it’s a better strategy than paying excessive interest charges just to build a credit history.
  6. Get different types of credit. The credit bureaus love people with different sources of credit. So if you can manage to get a credit card, cell phone, or car loan (usually with a large deposit), it will help you build a credit history with a strong score that much faster.

Financial institutions will usually start using your credit history after it’s been established in good standing for a period of 18 months. But several other factors will be considered as well, including your savings history, net worth, income and ability to provide a security deposit, such as a down payment on a mortgage. These strategies should go a long way towards establishing a Canadian credit history for new immigrants.

 

7 comments

  1. does not paying toll on time on a toll bridge count as bad for credit? as often times it comes in the mailbox late.

    • Hi Dong,

      That’s a great question and we’re not sure of the answer. It may depend on the bridge. No organization is required to report derogatory payments to the credit bureaus. Theorhetically, you could have one toll bridge / road report, while another does not. Does anyone know of any bridges that do report late payments to the bureaus?

      GreedyRates Staff

  2. Shawn Christopher

    Okay I’m new to this whole credit thing and was wondering if someone can verify or
    just tell me if there’s something wrong in how I see things .

    So I ended up saving up about 15,000$ in the bank from work ..
    And would like to start building my credit …
    So I opened an account with TD .. to get a 1000$ secured credit card …
    And they offered TFSA … a savings account that the 1000$ will go into
    until they unsecure it and give it back …
    And I guess I’ll get contributing to mutual funds or whatever .
    And a basic checking account with 3000$
    I really I wish I can find a way for my money to make something …
    I wanted to put my money to good use …
    Tangerine ? CIBC ? Vancity …
    Mutual Funds ? Stocks ? TFSA ?
    Is TD right place .. Have to start somewhere .

    Don’t know but I ended up going to Vancity to see what they can do
    also have Scotia bank ..

    Anyway ..
    If I have the secured visa ..
    and I charge 850 … pay it down to 550 before the due date ..
    Then it’s charged 300 .. then pay it down to 5$ so the 5$ can get interest ..
    And do that each month that will bump my credit score .

    Does that sound about right ?
    The utilization is down to 30% and paid down to less than 10% …
    So it shows use … utilization … and paid off each month …
    But still leaving 5$ so they can get paid .

    • Hi Shawn,

      There is no need to carry a balance or pay your credit card off early. Ideally, pay off your entire balance before the due date. That way you get the bank lending you money interest free during the grace period, while you earn interest. Secondly, you are still carrying a balance when the bank let’s you borrow money during the grace period – there is no need to REVOLVE the balance and accrue interest. You get just as much credit for carrying a balance during the grace period as you do thereafter.

      Hope that helps,

      GreedyRates Staff

  3. If you don’t pay your statement balance in full does the interest get charged on ALL the remaining balance or just the statement balance from before?

    • Hi Val,

      This policy may vary by bank. However, MANY Canadian banks now charge interest on the ENTIRE balance of the previous billing cycle if you make anything less than a full payment. For example, if you billed $1,000 on day one of your billing cycle and at time of payment you paid $900, you would be charged interest on the entire $1,000, from the time of your purchase to the time of your payment. This is a relatively new methodology applied by the banks. Previously they only charged interest on the unpaid portion of the balance i.e. the $100. The lesson? Pay down your balance every month.

      Kindest,

      GreedyRates Staff

  4. Telus Mobility does not “specifically state” that no credit history is required. Telus Mobility does a credit check for all post-paid mobile phone plans, and will require a $200 to $1000 security deposit if the customer has no credit history.

Leave a Reply

Your email address will not be published.