Credit history in Canada
To get a loan, mortgage or even a credit card in Canada, you need a credit history. You should start working on it as soon as you move to Canada.
In Canada, it is important to have a good credit history. It shows how the borrower repays the money he or she has borrowed, a list of paid and unpaid debts with different financial institutions, and the rating on these debts. Credit data is regularly received and kept by the credit bureau.
Lenders (banks, credit card companies, car dealerships, etc.) check credit history when issuing credit cards, loans to buy a car or real estate, when signing withdrawal agreements (e.g. when buying SIM cards). Credit history helps creditors assess their financial risks and determine the solvency of their clients.
How to start a credit history
Your credit history in Canada begins when you open a bank account and issue a credit card. The sooner you do this, the sooner you build up your credit history. In total, it will take you at least 3 months.
Major Canadian banks often give credit cards to new immigrants even without a credit history. In this case, the credit limit will not exceed 1.5-2 thousand Canadian dollars. Within a month, you need to remember to top up your account. Otherwise, you will have to pay a fine of about 20% of the amount you owe.
When you apply for a credit card, the bank will check your credit history with the bureau to see if you can pay back the money you borrowed. If your credit card is approved and you start using it, the bank will report to the credit bureaus any activity on the card: what your outstanding balance is, whether you make your monthly payments on time, etc. This is how you will begin to build your credit history.
If you cannot convince the bank of your ability to pay when you apply for a credit card, you can open a secured credit card. To do this, you need to make a deposit of money into an account at the bank that issues the card. The credit limit is usually a percentage of your deposit. If you pay money into your card on time, you can start to build up a credit history. Once the bank considers your history satisfactory, you can get a regular credit card.
Credit history report
Canada has two credit bureaus that regularly receive and maintain financial information about credit institution customers — Equifax and TransUnion.
You can order a free credit report from the credit bureaus. Equifax calls it a credit report and TransUnion calls it a consumer disclosure. The information in the report may vary from bureau to bureau.
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