Moving to another country, particularly to Canada, is thrilling! The idea of getting to meet new people, explore new places, and grow personally is just picture-perfect. But while settling down in a new country is fun, it presents its own set of challenges, particularly when it comes to establishing and building your credit score.
Most newcomers to Canada are surprised when asked about credit and credit scores and why it is so important, even for something as simple as renting an apartment or applying for a job. What's a credit score? – most newcomers would even ask.
A good credit score allows you to qualify for low-interest loans, mortgages, and credit cards, all of which save you money in the long run. Knowing the ins and outs of it and building your own can help ensure that you'll be able to enjoy living in Canada with the best terms!
So, where do you start building credit if you're new to Canada?
A credit score is the rating banks use to determine your loan eligibility. Credit scores will be between 300 and 900 points, with 900 being the highest. While each possible creditor can have its own set of credit score requirements, Equifax's ranges below is a good beginner reference:
It's important to note that if you are new to Canada, you will not have any credit when you arrive. That's because your credit history from your home country, good or bad, will not follow you to Canada.
To put it simply, your credit will start at zero. No worries, it's a piece of good news since you won't start at 300 – the lowest point in the scoring system. If you've made some bad decisions in the past that have ruined your credit scores, you can learn from them and create a new financial story when you move to a new country.
So, how do you build a Canadian credit score as a newcomer without a credit history following you?
Although you won't be eligible for large loans or mortgages right away, there are several simple steps you can take to start building your credit history and improving your credit score.
In Canada, two major credit authorities are in charge of computing a person's credit score, Equifax and TransUnion. These agencies gather data of your financial activities and then convert that data into a credit score. The following are what determines your credit score:
Equifax and TransUnion may compute the metrics listed above in slightly different ways. And it is up to every creditor to determine how they evaluate and apply credit ratings and credit report data. Some lenders will also look at your earnings, properties, how long you've been working, and why you're seeking a loan, among other things.
Equifax and TransUnion aren't just in charge of evaluating credit scores in Canada. Both credit bureaus give credit score checking options for a fee. So, if you want to check your credit score for free, you may use online services instead.
Use free web services to keep track of your efforts. Borrowell, Mogo, and Credit Karma are common choices in Canada. You'll have open access to your Equifax credit rating and other resources.
Through these websites, you'll be able to get specific credit score suggestions, payment reminders, and customized loan, home loan, and credit card deals based on your current credit rating. From time to time, you may also need to look at your credit report to see if any inaccuracies could harm your record.
Tip #1: Make sure you open a bank account for your daily transactions when you arrive in Canada. If possible, have both a checking and a savings account on hand!
Tip #2: Do your homework because your home country's banking rules, regulations, and charge schedules may differ from those in Canada.
Tip #3: While sending money abroad with a credit card may incur high-interest rates and ruin your credit, RemitBee provides fast transfer options via debit and e-transfer!
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