Building a credit history in Canada is an important step in achieving financial stability and independence as a student in Canada. A good credit history can help you obtain loans, credit cards and even rental applications. When you arrive in Canada, it is important to build a good credit history from the beginning. It can also help you get better interest rates on loans and credit cards, saving you money in the long run. In this blog, we will discuss the steps you can take to build a solid credit history as a student in Canada.
An international student in Canada with a great credit history can enjoy several benefits, such as:
- Obtaining loans and credit cards: A good credit history can make it easier for an international student to obtain loans and credit cards, which can be useful for managing expenses and establishing credit in Canada.
- Renting an apartment: A good credit history can make it easier for an international student to rent an apartment, as landlords often check credit history as part of the application process.
- Obtaining a mobile phone plan: A good credit history can help an international student get approved for a mobile phone plan.
- Applying for a credit card or loan: A great credit history can increase the chances of being approved for a credit card or loan.
- Getting a job: Some employers may check credit history as part of their background check process, so a good credit history can be an asset when applying for jobs.
- Better interest rates: A great credit history can get you better interest rates when applying for credit cards or loans.
- Overall, having a good credit history can make it easier for an international student to establish themselves in Canada and navigate the financial system.
As an international student, it can be challenging to establish a good credit history in Canada. However, with some planning and effort, it is possible to build a strong credit history that will be beneficial for future financial opportunities. Here are 5 steps to help you build a strong credit history in Canada as an international student.
- Get a credit card
The first step in building a credit history is to get a credit card. Credit cards are a great way to start building a credit history because they are relatively easy to get and use. When you apply for a credit card, the issuer will check your credit score and credit history. If you don’t have a credit history, you may be required to provide a co-signer or a deposit to secure the credit card. Once you have a credit card, it’s important to use it responsibly. This means making sure you pay your bills on time and keeping your credit card balance low.
- Take your first loan
The second step in building a credit history is to take out a loan. Loans, such as car loans or personal loans, also help establish a credit history. When you take out a loan, the lender will check your credit score and credit history. If you don’t have a credit history, you may be required to provide a co-signer or a deposit to secure the loan. Once you have a loan, it’s important to make sure you make your payments on time and pay off the loan as soon as possible.
- Be an authorized user on another person’s credit or loan card
The third step in building a credit history is to make sure you’re listed as an authorized user on someone else’s credit card or loan. Being an authorized user means that you can use the credit card or loan, but you’re not responsible for paying it off. This can be a great way to build a credit history if you don’t have the means to get your own credit card or loan.
- Monitor your credit score
The fourth step is to monitor your credit score and credit report regularly. Your credit score is a number that represents your creditworthiness, and it’s based on the information in your credit report. Your credit report is a record of your credit history, including all of your credit card accounts and loans. You can get a free copy of your credit report once a year from each of the two main credit reporting agencies in Canada, Equifax and TransUnion. Reviewing your credit report can help you identify any errors or discrepancies that may be hurting your credit score.
- Keep your credit utilization low
The fifth step is to be mindful of your credit utilization. Credit utilization is the amount of credit you’re using compared to the amount of credit available to you. A high credit utilization can hurt your credit score, so it’s important to keep your credit utilization low. This means keeping your credit card balances low and paying off your credit card balances in full each month.
Building a credit history in Canada takes time and patience, but it’s worth the effort. A good credit history can open up many opportunities for you, such as getting a loan for a car or a home, or even getting a better interest rate on a credit card. By following the steps outlined above, you can start building a strong credit history today and secure a better financial future for yourself.
In conclusion, building a credit history in Canada is a crucial step in achieving financial stability and independence. It’s important to get a credit card and use it responsibly, take out a loan, be listed as an authorized user on someone else’s credit card or loan, monitor your credit score and credit report regularly, and be mindful of your credit utilization. With time and patience, you can establish a good credit history and open up many opportunities for yourself in the future.