WELCOME TO CANADA Brought to you by:
BUILD YOUR CREDIT HISTORY IN CANADA And create a strong financial foundation for your family
E
stablishing a credit history in Canada will be one of the most important things you can do to secure your financial future in your new country. This is why it’s important to begin building a credit history as early as possible. What is a credit history? Your credit history begins the first time you get a credit card, a loan or a line of credit in your name. Your credit file tracks how much money you borrow and how quickly you pay it back. It then assigns you a credit score to identify the level of risk you present to lenders.
By Lisa Evans
to apply for, and responsibly use, a credit card. Using your credit card and making regular payments on time will help you establish a good credit history. • Establish good financial practices. Good financial management skills will be key to establishing a good credit score. Pay your bills in full and on time, or
a collection agency, which will negatively affect your credit rating. • Avoid multiple credit cards. When it comes to establishing your credit history, slow wins the race. Don’t rush out and get five credit cards thinking that will help you establish credit history faster. Each time you apply for a credit card, your
• Follow safe banking practices. To safeguard yourself from fraud, it’s important to never share confidential information, like your PIN (personal identification number) with anyone. It’s a good practice to do an annual credit report check to make sure no one has opened a line of credit in your name. • Ask your banker for assistance
at least pay the minimum amount shown on your statement and avoid going over the limit on your credit card. Not only is it important to pay your credit card bill on time, paying all of your bills, such as phone and utility bills, on time will also impact your credit score. Unpaid bills may be sold to
credit score is impacted. This is because the number of credit checks performed is factored into your credit score. Plus, having access to a lot of credit, and failing to pay it off, will have disastrous consequences on your credit score and will make it difficult for you to access credit products later on.
in establishing a credit history. While it’s common for newcomers to fret about not having a credit score yet, financial institutions are able to help. The Scotiabank StartRight® Program1 for Newcomers has unsecured and secured credit card options that help newcomers build their credit history.
How is a credit score determined?
Each time you borrow money, use your credit card or pay your bills, information about your financial transactions is sent to a credit reporting agency (the two main ones are Equifax Canada and TransUnion of Canada). The agency then uses this information to come up with your credit score. Your credit score is used by lenders to determine how much money you can borrow. Every time you borrow money in Canada — such as a mortgage for a home or a car loan — lenders will want some assurance that you can pay the money back. For this assurance, they look to your credit score. Your credit score may also be checked by landlords to determine whether you can rent an apartment.
Getting good credit
Follow these tips to establish a good credit history in Canada. • Apply for a credit card. The easiest way to start building your credit history in Canada is
® Registered trademarks of The Bank of Nova Scotia. 1. The Scotiabank StartRight Program, created for Canadian Landed Immigrants from 0–3 years in Canada, International Students and Foreign Workers. 2. The Scotiabank StartRight Mortgage Program, created for Canadian Landed Immigrants and Foreign Workers from 0-5 years in Canada.
August 2015
Canadian Immigrant
23
