Common sense of using credit cards when immigrating to Canada

In Canada, the easiest way to establish credit is to apply for a credit card, and then prove that you can use it responsibly by swiping the card and repaying it in time. For Canadian immigrants, if they use credit cards frequently and pay off their loans on time, their credit scores will increase. According to experts, the Canadian Credit Bureau provides two kinds of information to show your credit history, credit report and credit score. Canada's credit bureaus Equifax and Transunion use 300 to 900 points to define credit scores. The personal credit score provided by Equifax is called Beacon Score, and that provided by Transunion is called Empirica Score.

When banks or financial institutions apply for loans, they often see the requirements for Beacon scores, and the dividing line is usually 680 points. Those with a score above 680 are generally considered to have good credit, while those with a score below 680 are often subject to some restrictions when applying for loans.

For example, banks will demand higher income, down payment or higher interest rates. Although it seems that 680 is an average, in fact, the credit score of Canadians is much higher than this, so don't be complacent if you fail. If you want a better repayment rate, try to improve your credit score.

The calculation method of credit score is an American patent, like Coca-Cola's secret recipe, which is not made public. 1On July 22nd, 999, Fair Isaac demonstrated a calculation model of credit score when testifying to the US Federal Trade Commission.

The calculation formula is very complicated, but it is divided into the following items:

1.？ Credit card repayment record;

2.？ The amount of each use/repayment of the credit card;

3. The length of credit history;

4.？ Latest credit time;

5.？ Credit category;

6. The number of credit records;

7.？ Credit activities.

Weight from more to less. Among them, the most important factors that determine the credit score are: payment record, whether there is a bankruptcy record, and the amount of outstanding debts. How to improve the credit score;

Credit card payment history:

Credit card debt must be repaid on time. Although only paying the minimum repayment amount will not reduce the interest, paying tens of yuan before the final repayment date can keep your credit history unaffected.

Of course, credit institutions are not all so harsh. Generally speaking, if you pay at least the minimum repayment amount required by the other party within one month after the final repayment date, you will be relieved and will not be deducted.

Of course, you can also apply for automatic transfer, automatically deduct the minimum repayment amount required by the credit card from your bank account every month, and then pay the full amount in your spare time. This is also a simple solution.

Secondly, pay all kinds of arrears in time and maintain sufficient payment ability in the bank trading account. Although bank account overdraft will not affect the credit score, if you apply for automatic deduction service for utilities, public institutions will be very concerned about cheque bounce.

The bank describes the credit rating of Trade Line as r plus a number, and R 1 means that you have been paying on time, or no later than 30 days after the last repayment date, and it will become R2 after more than 30 days, and so on. As the number increases, your credit score will also decrease.

After paying off the debt, your trade line will change back to R 1. However, scores other than R 1 will be recorded by the credit company and written into your credit record. Bad records not only affect your credit score, but also customers with credit record problems will be treated strictly in the process of applying for loans, which is not a good thing. It may take you 1-2 years to establish a sound historical record before you can apply for a loan.

To sum up, credit card repayment record is very important for credit score and loan. If you really encounter personal financial difficulties for a period of time, you must also insist on paying off the minimum repayment amount every month and never delay repayment. Of course, always paying off the minimum repayment amount is not the choice of most people, and the interest rate as high as 19.5% (or even higher) will definitely make you feel pain.

Amount of each use/repayment of credit card:

The higher the upper limit of the credit line, it can not only prove that your credit is high, but also prove that your spending power is high. However, the higher the credit card, the better. Excessive credit card limit will not only cause greater losses when it is stolen, but also will not be more helpful to improve your credit score. Of course, if you have a high credit line, and you can keep a good balance between credit card usage and credit line, then a high credit line is beneficial to you.

So how much is the most cost-effective credit line? Generally speaking, it is recommended that the amount you use should not exceed 30% of the maximum limit of your credit card, up to 50%. If your credit card is basically full every month, the system will definitely judge that you rely too much on the credit card, which will reduce your credit history.