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New to Canada? Here are 5 ways to get started with credit.

Published Date
Author Maeva Tchang

Find out why building credit is important to your financial success.

Coming to a new country has its own set of challenges. From the culture to the systems, you’re sure to encounter experiences that are new to you.

For example, our financial system. As a newcomer to Canada, you may be overwhelmed by the many banking products available. If you’re feeling unsure about where to start, most financial institutions can help you build a solid foundation with these four basics:

  • A chequing account for income deposits

  • A savings account to set some money aside

  • A debit card to access your funds

  • A credit card for online purchases, and to start building your credit

Credit cards are one of the most common payment methods in Canada, and about 9 out of 10 Canadians have one. A credit card can help you build your credit score – a number that represents your history and behaviour with credit.

Lenders use your score to determine whether to extend credit to you for things like a loan or mortgage. You may even need a credit score when you’re applying for a job, an apartment or a phone plan.

Depending on your goals, credit is an important factor in achieving financial success in Canada. Here are five things you can do to be successful with credit as a newcomer.

1. Apply for a Social Insurance Number (SIN).

While not directly related to credit, a SIN number is a requirement to work in Canada, and having regular income shows lenders that you’ll be able to meet your payment obligations when applying for credit. You can apply for a SIN on canada.ca.

2. Start building your credit as soon as you can.

You may be surprised to know that if you have a credit score from another country, it’s not transferable to Canada. When you apply for your first Canadian credit card, you’re essentially starting from scratch, so it’s important to use it wisely:

  • Don’t apply for too many credit cards at once – applications, whether or not you’re approved, will appear as hard hits on your credit report

  • Don’t spend more than you earn

  • Stay within your credit limit

  • Make your payments on time and try to pay more than the minimum payment

3. Apply for a Capital One Guaranteed Secured Mastercard®.

So, you need credit to get credit. But what if you’ve never had credit in Canada? It may be difficult to get credit from a traditional bank as a new immigrant.

That’s when a secured credit card comes in. It works like any other credit card, except it requires security funds as collateral. Apply for a Capital One Guaranteed Secured Mastercard and start working toward your goals.

   

4. Aim for more than one type of credit.

Having a diverse mix of credit such as credit cards, car loans and mortgages can also positively impact your credit score. Just be mindful of your debt-to-credit ratio, which is how much you owe on all credit accounts and how much credit you have access to. In general, you’ll want to keep the amount of credit used on each account low.

5. Get a copy of your credit report.

Your credit report contains information about your history with credit in Canada, and is used to generate your credit score. As you build your credit, you may be interested in reviewing your report to get a sense of how your credit history appears to lenders, or help you detect suspicious activity on your credit accounts.

You may be able to order your credit report for free from the major credit reporting agencies: Equifax and TransUnion.

Interested in learning about applying for a credit card? Check out this article first.

* If approved by Quick Check, you can be 100% sure your card application will be accepted as long as:

1. There’s been no change in your credit file information, personal information or financial status from the time you receive your Quick Check results to the time you apply for one of our credit cards;

2. You’re at least the age of majority in the province or territory you live in;

3. Your application isn’t flagged for fraud prevention;

4. You don’t have an existing Capital One account; and

5. You haven’t applied for a Capital One account in the last 30 days or had an account with us that was not in good standing in the last year. In good standing means not past due, over limit, fraudulent, restricted, or part of a consumer credit counselling program or bankruptcy.

In some cases, we may not be able to open an account for you even though your application was approved. This can happen if we’re unable to verify your identity, or you don’t provide the required security funds if you’re approved for a Secured Mastercard®.