How to build credit history as a new Immigrant in Canada

How to build credit history as a new Immigrant in Canada
 
New immigrant? This is how you build your credit history in Canada
 
Starting a new life in a new country is difficult, especially if you don’t have enough money to do it. In a 2015 study conducted by the Bank of Montreal Wealth Management, it was revealed that over almost 20 percent of immigrants arrive in Canada without savings. Also, a large percentage of those who have a bit of cash end up spending half of it on urgent needs (e.g. house, food, and education) immediately after getting settled. For most financial institutions, it’s important that they’d be partnering with someone who’s trustworthy. Let’s accept it, gaining their trust is not an easy task if you’re a local and the dilemma is far worse if you’re a newly-arrived immigrant.
 
So these are the things you need to do to prove that you are worthy of these overly fussy and strict institutions’ trust:
 
Understand Canadian banking and credit scores
Although most established banks around the world look at the same things—history of payments, debts, credit length, diversity, and new inquiries—to determine your credit score or your eligibility for a particular loan, banks value each category quite differently. So it’s still advisable to understand how your chosen bank does its thing when it comes to determining your credit score. 
 
Also, knowing all the components that go into calculating a credit score is critical in understanding future risks should you decide to extend your credit. We advise that you check yours at TransUnion and Equifax, Canada’s biggest reporting firms before diving into any credit scheme or signing up for a financial loan.
 
Open a bank account
While immigrants are typically assessed through their foreign credit account, employment, immigration history, and residency status, it’s important that you have a local bank account (e.g. RBC, Scotiabank, BMO, TD Canada), especially if you plan to stay in the country for good. Also, use this time to talk to a financial adviser and have your situation and credit history evaluated. A high-interest bank account is also attractive to lending institutions since it shows that you can really save money.
 
Apply for secured and unsecured credit card
Secured credit cards, unlike unsecured credit cards, require a security deposit from the card issuer that functions as collateral against you defaulting on your payment. Experts suggest that you get a secured one if you have a decent credit history in your home country since it’s hard to be eligible if you don’t have one. 
If you choose to get an unsecured one, it’s advisable to use it right away and frequently.
 
Accept credit offers from banks if you still can
A small credit line from a bank can help you with establishing consistency, trustworthiness, and stability. Also, just like your regular credit cards, use it regularly and pay it on time. Experts also recommend availing of department store credit card accounts, which you can use for small purchases such as clothes and food.
 
Apply for a mobile phone
Smartphones have become an easier and more efficient way not only of accessing your bank transactions but also of making a purchase (regardless if it’s online or through brick-and-mortar), which says a lot about the importance of getting one with a steady network connection. 
 
But it’s also useful in upping your credit history game. Most giant telcos in Canada—or in the world—report your post-paid subscription to the credit companies.  Of course, a post-paid plan is better than a pre-paid plan to prove that you can maintain a phone line.
 
Invest
Investing in something, say, a car or property, does a lot of things for your payment history. It shows how responsible you are with your money and sincere with saving and establishing a healthy financial life in your new country. Moreover, investing through a particular bank program is also investing with the bank, which lenders like. If these big banks can trust you, then so can these lenders.
 
Prove your worth
It’s imperative to always pay your credit bills on time, whether you are paying the minimum or more. Remember that a big chunk of your credit score—35 percent—is gauged through your payment history.  You can also set up automatic monthly payments through your bank (every bank has this service), but remember to always check your account to determine if you still have enough cash in it since one late payment could hurt your record.
 
Additional tips
Don’t be overly complacent even if your monthly credit payments are automatically deducted from your account. Minor mishaps such as double billing can happen, and it can affect your payment history. 
  • Don’t go over the credit card limit. It kind of shows your character as a credit card user, especially if it becomes habitual. Also, most credit bureaus don’t like it. Remember, your ultimate goal is to project yourself as a wise and responsible spender.
  • Pay at least the minimum if you can’t pay the full balance on your credit card. Unwanted debts should be paid off as quickly as possible. 
At the end of the day, the credit bureaus will look at your history and not at the number of credit card subscriptions under your name. Of course, it will be a plus on your end if you can handle them ably but never plunge into a new responsibility if you think that it would just be a burden to you down the road.    
 
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