12 Tips for Building your Credit Rating when Emigrating to Canada
Part one – before your arrive
1. Open a bank account in Canada as soon as you can. You can open an account with some level of functionality without being in Canada but your identification will need to be confirmed in person in Canada at some point to fully activate the account. N.B. this will not affect your overall credit rating it just makes it easier to start building it once you arrive in Canada. By having a Canadian bank account you are building a history with the bank, that will make it easier to get credit cards, car loans and lines of credit with them on arrival.
2. Budget for security deposits. Include an amount in your financial planning to pay deposits to secure credit cards, arrange utility services such as gas, power and telephone. For household bills this may be around $200 for each service and $1000 for credit cards.
3. If you do not have a location in mind yet choose one of the ‘Big 5’ large banks who have branches across Canada. When you arrive you will not need to change banks. TD Bank, RBC, BMO, CIBC, Scotiabank.
Part two – after arriving in Canada
1. Using credit even if you don’t need it is the quickest way to build a good credit history.
2. Pay by credit card wherever possible, if you use cash you will be invisible to creditors.
3. Get a credit card through the bank and use it, make sure you pay your bills promptly. This may be a secured credit initially. Meaning if you need $1,000 credit limit you would have to deposit $1,000, as a fully refundable security deposit.
4. Get credit cards in your own name, being a second card holder on a main account will not build credit history for the secondary card holder.
5. Get utility bills such as electricity, gas, telephone in your name and pay the bills in full and on time.
6. Try not to run your balances up to your credit limit. Keeping your account balances below 75% of your available credit.
7. It is OK to apply for more than one credit card even if you are refused by one does not mean you will be refused for all. When the reason for refusal is lack of credit history rather than bad credit history, it will not affect your long term credit building.
8. Apply for store cards e.g. Sears, etc and ensure you pay them off promptly.
9. Secure a small loan through your bank and pay it off regularly.
Other important facts
- Mortgage payments do not count towards credit rating
- You can get an international credit report from www.equifax.com, this is accepted by majority of mortgage lenders in Canada.
We have more information on day to day banking in Canada, getting a pre-approved mortgage, working out how much a mortgage is going to cost you, and how much you can afford on Emigration Research for Canada – Getting Started Audio
Feel free to pass this article on to anyone else who may be interested, you are welcome to use the information in your blog, newsletter or other online publication as long you include this info. Louise Green runs The Expat Coach specialising in planning and preparation services for emigrating to Canada. www.TheExpatCoach.com
