How to Establish a Credit History in Canada

Your Canadian credit history, and the resulting credit score, is used by various Canadian financial institutions to determine your credit worthiness. A strong credit history in Canada can help you get lower interest rates on credit cards and other loans. It is important for individuals new to the Canadian lending field---such as recent university graduates or new immigrants---to establish a positive credit history. Learn how to establish a credit history in Canada to help build a better financial future for yourself and your family.

Instructions

1

Understand the importance of a strong credit history and how Canadian financial institutions, such as banks, use it. Your credit history is essentially a database of your financial history and how you manage your credit. The three major credit bureaus in Canada record how Canadians borrow money, and use this credit history to assign a credit score to the individual. When you apply for credit, whether its a new bank account or a car loan, the financial institution will review your credit history to determine whether it is a good financial decision to lend you money. Individuals with little to no credit history in Canada will have a difficult time applying for any sort of credit-based account.

2

Open a Canadian bank savings account. While a savings account will not help to improve your credit score by much, it is essential for applying for credit cards and loans. Having your own savings account also helps to establish a start date for your credit history in Canada. All major banks have offices in most provincial cities, and may also be contacted online (see Resources).

3

Apply for a Canadian credit card. This is the quickest and most efficient way to build and establish a credit history in Canada. All of major banks have their own credit cards linked with Visa, MasterCard and American Express. Choose the brand of credit card that you prefer. Once in possession of the card, never use more than 60 percent of your credit balance, and make payments on time. A strong credit history can be established faster if you pay off the entire balance each month.

4

Open a Canadian checking account. Checking accounts, like credit cards, require you to manage your finances and can positively impact your Canadian credit score. Find a checking account that meets your needs. For example, the Royal Bank of Canada offers three levels of personal checking. Choose a checking account plan that allows you to withdraw and write the amount of checks you think you may use in a month.