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Importance of Building your Canadian Credit History

How To Build Credit Score In Canada

Money doesn’t buy happiness, but it does pay the bills. Bills of all the things we humans need. But can everyone afford to pay all the payments upfront? NO. It is one of the reasons why we Canadians prefer postpaid plans more (Use first, pay later). In the olden days, there was a system of borrowers and lenders. The evolved version and a much more sensible one at that are what we call today’s world- loans. Why sensible? Put simply, there is a rating that ensures the loans given are fair and just to all. This rating is called a credit score.

Why is the credit score important in Canada?

Most people who have entered or are about to enter Canada don’t know the impact your credit score can have on your life in Canada. Even on something as irrelevant as renting an apartment. Your credit score goes beyond determining the credit limits and interest rates. It shows how good you’re at managing finance, commitments, and your purchasing power.

Things that your Credit score might affect

  1. Your accommodation: If you have a poor credit history the person might be reluctant to lend a flat to you as you might default on your payments.
  2. A new job: In case, the person hiring checks your credit score and it’s not good, he might be influenced by it in his decision-making.
  3. Mortgage rates: They say a good credit score is above 680-690. Lower than that might affect your mortgage rates. The lenders won’t think you’re reliable and either reject or charge you higher rates. Always try to maintain a healthy credit score when making such important buying decisions. It could save you thousands.
  4. Cars you buy: Assume, you want to buy a car on loan. Even here a poor credit score will mean you’ll end up paying more and probably end up with the risk of an even lower credit score.

Apart from these the credit score also affects the other daily essentials you buy on credit, the credit cards, and also you might miss out on great rewards (the ones you get when you have a really good credit score)

What is a good credit score in Canada?

Your credit score is of utmost importance. The higher it is, the lesser your interest rate. And even though you might not need a loan right now, one never really knows when they will require money. Even a 1% change in interest rate can cost you thousands in EMIs. Let’s take a look at the score and how it affects your rating.

  1. Bad: 300-580
  2. Average: 580-640
  3. Fair: 640-700
  4. Good: 700-750
  5. Excellent: 750-900
What impacts your credit score in canada?

We have seen so far, what a credit score is, what a good credit score is, and how it can affect your daily life. Now let’s take a look at what can have an impact on your credit score.

Canada’s credit bureaus, Equifax and TransUnion, are the main houses that keep a tab on your credit scores and use the information collected to ascertain your credit score. These are some of the key factors that they consider;

  1. How punctual are you on your payments?
  2. Whether you have a balanced usage across different kinds of credit: credit cards, car loans, home loans, etc.
  3. Keeping the outstanding amounts under control
  4. Not getting close to your credit limit
  5. Record of bankruptcy or missing too many payments.
  6. Applying for too many credits at once

The trickiest one is when it is your first time applying for a loan or credit card. Since your credit score is 0 it is tough for the person to access your capabilities. It is important here to build a credit history. CanadianSIM not only is a great way to start that, but we also help you begin the process from day one of your life in Canada.

How to build a credit history?
  1. Open a bank account (if you don’t have one already): This is the first step. Have doubts regarding the process? Our plans offer unlimited calling across Canada. Take as much time as you need to solve every last question you might have.
  2. Apply for a credit card: Now that you have an account in a major bank, apply for a credit card. Use it wisely keeping a track of your credit limits and making timely payments, regularly. Keep track of it directly on your phone with our data-rich plans. Save time and energy!
  3. Apply for a small loan: Next, apply for a small loan. It will stabilize your score even more.
  4. Keep track of all your payments: Keep a tab on all your credit dues and ensure you pay all the dues on time.
  5. Maintain a good record of income as well.

These points will help you showcase your credibility, prove your purchasing power is great enough, and with time help you unlock better credit limits and higher credit scores. To keep track and optimize the management of your credit scores use our top-rated SIM card and plans. CanadianSIM is a brand that is loved by its customers and built for its customers. Making your life in Canada easy with quick, value-driven service is our aim. Happy Borrowing!