Building a credit history in Canada is listed as one of the top challenges facing thousands of newcomers that settle here every year, with RBC researchers quoting many as saying they feel "overwhelmed" by it.
Almost one-fifth of newcomers (17%), who have been in Canada less than a year, say they feel overwhelmed by all the talk about the need for credit history. That number more than doubles to 43% among newer Canadians the longer they are in the country.
Misconceptions abound when it comes to credit building for newcomers to Canada. Some believe your credit profile improves if you earn a lot of money or that it depends on your age. But lenders tend to look at a host of factors when you want to borrow money, including your credit history, ability to pay bills and your total net worth.
Here are some tips to help set new Canadians on a strong credit path:
• Build your credit history as early as possible. Getting a credit card is often the easiest way to start building a credit history. By making purchases and paying them off on time each month, you are establishing a record of responsibility.
• If you are unable to pay the balance on time, make sure to at least pay the minimum balance. You'll save on interest charges and still help build your credit history.
• Check your credit report at least once a year to make sure it's accurate. You can request your report from Equifax or TransUnion, two credit reporting agencies in Canada, to see where you stand. The scores are measured on a scale from 300-900 and the higher the score, the better your credit.
