How to Build Credit History in Canada

Building a good credit history plays an important part in your financial freedom. A low credit score can make it difficult to obtain credit; all lenders in Canada use the services of credit reporting agencies.

A low credit score doesn't always mean that your credit history is poor; it could be that the credit reference agencies have little knowledge about your finances. Perhaps you only have one credit card or maybe you don't use the cards you have. Perhaps, too, you have few or no other lines of credit such as personal loans or a home loan. You may only have just attained the legal age to apply for credit. All these factors can affect how high your score is. Borrowing money sensibly and making timely payments are essential in building a credit history.

Instructions

1

Apply for your Canadian credit history. This can be obtained free by mail from either of the two credit reference agencies listed in the Resources section. Click on either link. This will take you directly to the page where full details are given and the application form can be downloaded. If you want to get it more quickly and view it online, a fee is payable.

2

Check your credit history report carefully for errors. Contact the credit reference agency if anything needs correcting. If correct, identify if there are any obvious ways to build your credit history. Check your payment records for any loans or credit cards. If you have been late or missed a payment this will be shown. Make certain that all payments are made by the due date. This helps build your credit history.

3

Using credit cards will build your credit history. If you don't have any, apply for one. If approved, wait some time before applying for any more. Multiple applications reduce your score. Never exceed the credit limit. Keeping about 60 percent or more of your available credit and using it regularly builds your credit history.

Store cards are often easier to get than a major credit card when you have limited credit history. Remember that the interest rate will be higher but used regularly and paid off monthly means no interest is payable. This will build your credit history.

4

Open a checking account. Use checks or debit cards to make purchases. Banks report to credit reference agencies so keeping an active and wel- maintained account will build your credit history.

Obtaining a small pre-agreed overdraft occasionally can build your credit history. Overdrafts are usually very short-term loans. Borrowing the money and ensuring that it is paid back prior to the agreed date will improve your credit history. It shows you can be trusted.

5

If you have no credit, get a pre-paid credit card. There are many such cards available. Check which ones offer to help build your credit history as not all do. Use the card regularly and keep it topped up.