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Financial Literacy

How to build credit in Canada – a handy guide

April 04, 2018

Are you new to Canada? Or maybe you just have questions about credit in general? Well, we’re here to help! In Canada, your credit score and credit history are important for when you want to buy a house, buy a car, or take out a loan. So read on to learn the basics of credit in Canada and how it can help you achieve your financial goals.

 

what is credit?

 

‘Credit’ is the amount of money you have been trusted with by lenders. Your ‘credit score’ is a number based on the credit you have been given and how you have paid it back. The higher the number, the less of a risk lenders will think you are. If your credit score number is high, that is considered having good credit.

 

why do you need credit?

 

If you have ‘good’ credit, it will be easier to get a loan and lower interest rates. If you have a low credit score, or ‘bad’ credit you may not be able to get a loan. This can make it hard to get a credit card, buy a car or house, or get a cell phone.

 

This is all fine and dandy, but if you are a new Canadian, or just simply new to the credit game, you probably want to know how one can actually build credit. Well…

 

  • Open a bank account (even if you just have a small amount of money to add).
  • Open a line of credit.
  • Ask a lender about a cash-secured credit card
  • Invest (to show you are responsible with your money!)
  • Use credit carefully. As in, if you get a loan, make sure you pay it off as promised.
  • Don’t take out too much credit. If you have several credit cards, lenders might think you are a risk.

All that said, we know having good credit can help you get a loan and getting a loan is something many Canadians do every year. A loan can help you go back to school, start your dream business, support your family, and so much more.

 

 

have questions?

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