Every year, thousands of people immigrate to Canada in search of new opportunities and a better life. Today, Statistics Canada estimates that immigrants account for more than one-in-five Canadians and projects that by 2055 immigration will account for 90 per cent of the country’s population growth. But figuring out how things work in a new country can be challenging, from locating new schools and communities to navigating the banking system.
According to a poll from TD Canada Trust, most newcomers said they did not know how to open a bank account (47 per cent), apply for a credit card (58 per cent) or mortgage (87 per cent) or send money to family overseas (72 per cent) in their first three months in Canada. The biggest surprise New Canadians encountered setting up their finances was the credit rating system (24 per cent) and not having access to credit right away (23 per cent).
“One of the major challenges new Canadians face when they arrive is establishing a credit history so they can buy or rent a home, get a credit card, purchase a car, and even secure a mobile phone plan and insurance,” said Stephen Menon, Associate Vice President of credit cards at TD Canada Trust. “But in order to build a good credit rating, you need to apply for credit, which is challenging when you are new to Canada and don’t have a Canadian credit history.”
A credit rating reflects the ability of a potential customer to pay back borrowed money, and is recorded by at least one of Canada’s major credit-reporting agencies: Equifax Canada or TransUnion Canada.
The following tips can help newcomers build their Canadian credit rating:
• Apply for a secured credit card: According to the poll, a quarter of new Canadians (23 per cent) said they wish they knew more about how to get approved for a credit card. Menon recommends newcomers visit their local branch to apply for a secured credit card as soon as they arrive.
• Pay all of your bills on time and in full: Late bill payments have the potential to negatively affect a credit rating, so Raymond Chun, Senior Vice President at TD Canada Trust, recommends setting up pre-authorized debits to avoid missing recurring bill payments. According to the research, 49 per cent of newcomers pay their bills through online banking and 30 per cent use a mobile app on their smartphone or tablet for banking services.
• Check your credit rating before applying for a mortgage: Eighty-seven per cent of newcomers didn’t know how to apply for a mortgage in their first three months in Canada and 38 per cent said they wish they knew more about local mortgage rules. Farhaneh Haque, Director of Mortgage Advice at TD Canada Trust, said qualifying for a mortgage and favourable interest rate depends on a number of factors, including a solid credit rating. She recommends homebuyers check their rating at least six months before applying for a mortgage, so they have time to correct it if there are any flaws.
“It can take up to 18 months to build a credit history robust enough to apply for a mortgage, but I encourage newcomers to meet with an expert earlier to learn more about the home buying process in Canada,” Haque said.
Language can be one of the biggest challenges for newcomers when they arrive in Canada; 41 per cent found communicating difficult when they first arrived and 55 per cent said it was important for them to find a bank that offered services in their native language.
TD Canada Trust offers telephone banking services in more than 170 languages, including the ability for customers to make an in-branch appointment with a financial advisor who speaks their native language.
“We also found that many new Canadians like to bank on Sunday, so many of our branches open on Sundays are located in communities where there are large populations of new Canadians,” said Chun.