What are the good credit scores of new immigrants in Canada?

# Canadian Immigrants # Can you introduce the credit scores of new immigrants in Canada? Many new immigrants are surprised by the importance of credit in Canada's financial system. In some countries, people usually get credit only when they need it, and debt is usually considered as a bad thing. Unlike Canada, the economy is driven by credit, and credit is even used for daily shopping. The following is published by No Finishing!

1. What are the good credit scores of new immigrants in Canada?

In Canada, your credit history and credit score represent your financial reputation and success. When you first arrive in Canada, establishing your credit score should be one of your financial priorities. In this article, we will introduce the working principle of credit score, a good credit score and how new immigrants establish a good credit record in Canada. In this article:

How does credit scoring work in Canada?

What credit points do new immigrants in Canada start with?

What is a good credit score in Canada?

How to get a credit score as a newcomer?

As a newcomer, how long does it take to get a good credit score?

Factors affecting your credit score in Canada

How does credit scoring work in Canada?

The credit score is a three-digit number, which represents your credit status and financial reputation. Your credit score can help lenders decide whether to provide credit to you according to the risk of whether you can repay your debts in time.

When you get credit in Canada, credit institutions such as TransUnion and Equifax will record your credit usage and repayment history data in the credit report. Your credit score is an objective summary of your detailed credit report-although your score sometimes varies from institution to institution.

The higher your credit score, the lower your risk when the lender provides you with credit. This means that you will be more likely to get loans, mortgages, higher credit lines, lower credit scores and lower credit scores.

What credit points do new immigrants in Canada start with?

When you first arrived in Canada, you began to have no credit score. This is different from poor credit score or zero credit score. On the contrary, your credit score does not exist yet. This situation will change once you get credit from financial institutions and start to use and repay it.

Can my credit record in my country be transferred to Canada?

As a new immigrant, your credit history in your country will not continue to Canada, so you need to establish your Canadian credit history from scratch.

Some countries, such as the United States, have the same credit institutions as Canada. However, these institutions will not enjoy financial data across borders, and your credit history will not be transferred when you move from one country to another.

What is a good credit score in Canada?

Tip: Credit institutions independently calculate your credit score, so your credit score may be different from TransUnion and Equifax. Be sure to record the two scores and mark any differences.

In Canada, the credit score is between 300 and 900, and the higher the score, the better. According to TransUnion, the credit scoring range is classified as follows:

300 to 692: poor

693 to 742: General

743 to 789: OK.

790 to 832: Very good.

833 to 900: Excellent

Canadian credit institutions have slightly different benchmarks for what is a good grade. Therefore, even if the score is the same, your credit score may belong to different categories, depending on the agency report you view.

Generally speaking, if your credit score is 750 or above, you are more likely to get credit, but if your score is below 700, the lender may not want to take the risk of providing you with loans or mortgages. However, this may not always be the case, especially if you are a new immigrant to Canada.

Each lender decides the credit score range that it thinks is good or risky. In addition, your credit score is only one of the factors that lenders use to evaluate credit risk. Most financial institutions understand that it takes time for new immigrants to establish a good credit score. Just because you don't have a credit score doesn't mean your credit history is poor.

Some banks offer credit cards to new immigrants who have not started to establish credit records in Canada. However, once you have a good credit score, you may only qualify for other credit products, such as loans, mortgages or credit lines.

How to get a credit score as a newcomer?

When you apply for and use credit for the first time, you start to establish your own credit score. When you start using a credit card and repay your debts on time, the credit institution will use your shopping and payment data to establish your credit record.

If you use credit wisely, your initial credit score will usually be close to the low end of the fair category. As credit agencies get more information about your credit usage, the length of your credit record will increase and your credit score will begin to improve.

Some Canadian banks, such as Royal Bank of Canada (RBC), provide special new immigrant credit cards for new permanent residents, international students and temporary foreign workers in Canada. After arriving in Canada, you may be eligible to apply for a new immigrant credit card, even if you don't have a credit score.

As a newcomer, how long does it take to get a good credit score?

There is no fixed time frame for how long you can get a good credit score as a newcomer. The speed at which your credit score improves depends on your credit use and payment behavior. The more frequently you use credit cards, such as shopping with credit cards, the more data the credit institutions will get about your financial situation.

Generally speaking, if you use your credit correctly, don't overuse your credit limit, and pay off your debts on time, you may be able to raise your credit score to the "good" range within one or two years after you arrive in Canada. However, if you don't use credit cards often or pay your bills in full on time, it may take you longer to get a fair or good credit score.

Factors affecting your credit score in Canada

The length of your credit history

The length of credit record is an important factor to determine the credit score. It shows how long your credit account has been open and how often you use it. New immigrants who have just started living in Canada have a brand-new credit record. However, as time goes on, credit institutions and financial institutions will know more about your reputation.

The more frequently you use a credit account, the more information lenders need to evaluate your payment and consumption behavior.

Investigation of firm's credit

When you apply for credit or someone inquires about your credit, the system will inquire about your account. Your credit score may be negatively affected by the frequency and recent time of your credit application. In some cases, the landlord may also conduct a credit survey before you rent a house.

Please note that checking your credit score will not adversely affect your credit score, because it is considered as "soft blowing". Credit checks conducted by financial institutions, lenders or other third parties before granting you loans, providing credit or increasing your credit limit are regarded as "significant losses" and lead to a decline in your credit score.

Credit utilization rate

Your credit utilization ratio, that is, your debt-to-credit ratio, is a comparison of how much credit you have and the proportion of credit you use. For example, if you have a credit card with a credit limit of 3000 Canadian dollars, this is the credit limit you can use. If you spend about 1 1,000 Canadian dollars on your credit card every month, your credit utilization rate is (1 1,000/3,000) x 100=33.33%.

High credit utilization rate will have a negative impact on your credit score. According to experience, avoid using more than 35% credit limit. If you have multiple credit products, such as multiple credit cards or a credit line, your credit utilization rate will be calculated according to the accumulated credit available to you.

Tip Icon Tip: If you always use more than 35% credit limit, you can reduce your credit utilization rate by asking the bank if you can increase your credit limit.

Contract payment

Your debt repayment record, or your history of paying bills, loans and credit card balances, will also have a significant impact on your credit score.

Over time, paying off debts in full and on time will improve your credit score. On the other hand, missing or delaying payment may damage your credit history. Negative factors such as late payment may remain in your credit report for up to six years and have long-term financial consequences.

Credit account balance

The total amount you owe to your credit account, including credit cards, loans and mortgages, will also affect your credit score. Over time, if you have a good payment history and start to reduce your credit account balance, some negative effects may be offset.

Prompt icon prompt: As a newcomer, you can easily repay the loan by applying for the required credit limit.

Credit portfolio

If you use credit responsibly, using different types of credit or diversified credit portfolios can have a positive impact on your credit score. However, new immigrants usually need some time to establish a good credit score and qualify for other types of credit.

As a novice, it seems a daunting task to build your credit score from scratch in Canada, but it is not necessary. Some Canadian financial institutions provide special credit cards for new immigrants, so that you can start to establish your own credit record immediately after arrival; Talk to the new financial adviser and find out the best way for your situation. At the same time, it is wise to understand the working principle of credit score and the factors that affect your credit record, so that you can make good financial decisions.