Why do you need a good Canada credit score as a newcomer ?
- February 9, 2023
- Posted by: ASIFCONSULTING
- Category: General
It is important to establish a good credit score in Canada. Here are the ways you can do so.
As a newcomer to Canada, you will quickly find out the importance of building a good credit score.
Financial Institutions and other businesses will generally look at your credit score to determine whether to do business with you or how much money “to lend you”. Here are some quick examples:
- To rent a property and qualify as a tenant
- Applying for a credit card
- Getting a mortgage to purchase a home
How credit scores are calculated:
Your credit score is determined by your credit history. Every time you apply for or receive credit, and every time you make or don’t make a payment on time and use your credit you are building your credit history.
When you apply for credit, there are three ways your financial institution will evaluate your credit history:
- Review your past dealings with them;
- Consider any new information you provide in your credit application;
- Contact a third-party credit agency for a report on your overall credit history.
Credit companies collect information from the companies that provide the credit to you. This builds your credit report [ history, which represents a summary of your activities with a variety of financial institutions.
It is good practice to request the details of your credit report from the credit agencies periodically, to help you understand your rating and ensure that the information is correct. This is important because a strong credit record enhances your ability to get credit in the future, whereas negative reports such as overdue payments or non-payments, could make it more difficult for you to borrow or get credit in the future.
Your credit score from other countries will generally not be used in Canada. Two companies in Canada gather the information to provide you with a score – one of them is Equifax and the other is TransUnion
What’s a good credit score?
EquifaxⓇ notes that a good credit score in Canada is usually between 660 to 724. If your credit score is between 725 to 759 it’s likely to be considered very good. A credit score of 760 and above is generally considered to be an excellent credit score.1 The credit score range is anywhere between 300 to 900.1 The higher your score, the better your credit rating.1
Your credit score helps lenders to assess your credit capacity.2 The higher your score, the more likely you are to get approved for loans and credit.2 It may also be checked when applying to rent a property or when applying for certain jobs.2 However, everyone’s financial situation is different and your credit score will change over time based on your credit history and the amount of debt you owe.
What information are these companies collecting to determine my credit score?3
EquifaxⓇ and the Government of Canada note the following information is assessed to determine your credit score:
- How consistent have you been in paying off the money you have borrowed? Note that opening a credit card is considered borrowing money and will be taken into account3
- The amount of credit that a bank or credit card company has given you versus how much you have used up3
- The length of your credit history – this is something you can’t impact when you first arrive but the earlier you start building your credit, the better3
- You should also avoid applying for too many loans, having too many credit cards, and requesting too many credit checks in a short timeframe.4 That’s because it could negatively impact your credit score too.4
How do I build a good credit score?
As a newcomer, it is important to understand how to establish a good credit score. There are several ways you can do so:
1) Apply for a credit card
TD offers a credit card as part of its TD New to Canada Banking Package. You have to apply and be approved for it. Once you get your credit card, you can make purchases with it. You should then make sure to pay your payments on time. The earlier you open your first credit card, the faster you will start building your credit history.
2) Get a cell phone or internet service plan
To open certain cellphone or internet plans, a credit check is necessary. Make careful to pay your payments on time once you’ve signed up for a cell phone or internet service plan. Additionally, not all wireless providers record your monthly payments to credit bureaus. If so, you should inquire.
If you happen to be leasing a car, the payments on a timely basis could count towards a good credit score. The same would apply to a student loan, mortgage, or any other form of loan – it’s all part of establishing a history of you paying back money that you owe promptly.
4) Budgeting Helps
No matter what the sort of credit you have taken out from the models above – to get a higher FICO rating you should make installments on time. One of the approaches to doing this is to ensure that you plan appropriately. In the event that you want assistance with making spending plans, TD can assist you with dealing with your cash from any place you are with the TD Application or web based banking through EasyWeb.
Why Choose TD?
150 years helping Canadians:
TD has a proud history of delivering financial solutions to Canadians for more than 150 years. TD also brings a century of experience helping newcomers navigate the unique challenges of the Canadian banking system.
With over a thousand branches and a reputation for excellence in financial services, TD has become one of the largest and most trusted banks in Canada, now serving 16 million Canadians.
TD offers online support and resources of interest to newcomers on topics like banking basics, moving to Canada, credit score essentials, and more. TD can also serve you in more than 50 languages at more than 1,100 branches. TD is open longer hours for your convenience. TD has thousands of ATMs across Canada to help you take care of your everyday banking quickly and easily.
Ready to Bank?
Learn more about TD’s New to Canada Banking Package today.
Book an appointment to talk to a TD Personal Banking Associate about the TD New to Canada Banking Package. You can book online right away, or visit the TD website to learn more.
1 What is a Good Credit Score, Equifax Canada.
2 Credit Report and Score Basics. Government of Canada, May 13, 2020
3 How are Credit Scores Calculated, Equifax Canada.
4 Improving Your Credit Score. Government of Canada, 13 May 2020.
Legal Disclaimer:While the data in this article was considered to be true and trustworthy when it was posted on this website, we cannot guarantee that it is always correct, full, or up-to-date. The information in this article is provided just for informational reasons; it is not intended to be relied upon for tax, legal, accounting, or financial advice. This information should not be interpreted as an offer to purchase anything. Products and services from the TD Bank Group are only provided in places where they can be sold legally. The provisions of the relevant agreement apply to all goods and services. Without prior warning, the material in this article is subject to change.
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