Category: Naukri & Paisa Published on Thursday, 28 June 2012 11:05 Written by Tapa Menon
How to get credit if new to Canada
For newcomers to Canada, the challenges of creating a new life here can be made a bit easier with access to credit for everyday living or unexpected needs. Early access to Canadian credit can also put you in a better position down the road for large purchases such as buying a home or car that may require a credit history or credit rating.
Therefore, upon arriving in Canada, it’s important for newcomers to establish a Canadian credit history. One of the best ways to do so is to have a Canadian credit card and use it wisely, say advisors in this field. A credit card can also help manage everyday finances such as signing up for a mobile phone, renting a car or booking a hotel.
“Building credit history is a key step to settling into your new home country,” says Paul Sy, the director of multicultural markets at RBC. “We recognize this challenge and can help with our Newcomer to Canada Credit Card program – an unsecured credit card of up to $1,000 and a second one with a $1,000 limit, for your spouse or partner. Obtaining this new unsecured credit card requires no credit history, and it helps to build your credit history in Canada faster.”
To do this, Sy offers the following tips:
• Make sure your monthly account statement is correct.
• Pay your balance on time. If you are unable to pay the entire amount at once then it’s best to pay more than the minimum balance whenever you can. For example, start by paying ten per cent more than the minimum payment on your credit card. You’ll save on interest and build your credit history too.
• If you find yourself falling behind, prioritize your payments. Once you have made all of your minimum payments, determine which bills have the highest interest rates and concentrate on paying those off first.
• Be up front and honest. If you are going to miss a payment, or if making the minimum payment is proving to be too much, contact your lender right away. They may be able to work out a more manageable payment plan.
Build a high credit score to make borrowing easier
Part of a Lender’s decision to grant credit is an assessment of your past credit history which is why it’s important to build credit once you arrive to Canada. Depending on your circumstances, some people already have a credit history while others may need to start fresh and build a new one once they arrive.
“A credit report is a summary of your credit history. It impacts your ability to borrow funds you may need to purchase a first home, buy a car or other such investments,” says Paul. “It’s important to manage your credit report as part of your overall financial picture.”
Once established in Canada, the five main factors looked at by lenders are:
Credit history: Do you have a good credit score and positive credit history? Lenders review the times you’ve borrowed in the past and your payment history on your credit cards, loans and mortgages.
Character: How much care and responsibility have you shown in managing your finances? Do you pay your bills on time? Do you have a steady job?
Capital: What’s your net worth? Do you have any savings, real estate, investments or RRSPs?
Capacity: What are your current debts? Do you earn enough income to pay them off and take care of your other financial responsibilities?
Collateral: Do you have assets? These are items the lender can collect if you default on payments such as your home, car and investments.
More information is available online at www.rbc.com/canada.