“People who recognize that money won’t buy happiness are still willing to see if credit cards will do the trick.”
How to build your credit history as fast as possible and maintain a high credit score should be one of the top priorities of every new immigrant and indeed every adult Canadian.
If you hope to someday buy a home, get a mortgage, buy a car or apply for any loan, it’s important to have a good credit history and excellent credit score.
Here are 9 ways you can build your credit history fast and maintain a good credit score:
- Start early
Get a credit card immediately and start building your credit history immediately. Most banks offer a credit card with a spending limit of at least $2,000 to newcomers.
Scotiabank has one of the most attractive banking packages for newcomers. Other banks also have attractive offers too for newcomers. When you start building your credit history early, your credit score also starts increasing.
- Pay your bills on time and monitor your payment history
Remember the money on your credit card is not free money. Pay your monthly credit card and other bills on time. Your payment history is the most important factor for your credit score. To improve your payment history:
- always make your payments on time
- make at least the minimum payment if you can’t pay the full amount that you owe
- contact the lender right away if you think you’ll have trouble paying a bill
- don’t skip a payment even if a bill is in dispute
Follow this golden rule in building a good credit history and credit score.
- Use credit wisely
Don’t go over your credit limit. If you have a credit card with a $5,000 limit, do not go over that limit. Borrowing more than the authorized limit on a credit card can take a big hit on your credit score.
- Use less than 35% of your available credit
This will build your credit history and give you good credit score. For example: if you have a credit card with a $5,000 limit, try not go beyond $2000
- Increase the length of your credit history
The longer you have a credit account open and in use, the better it is for your score. Your credit score may be lower if you have credit accounts that are relatively new.
If you transfer an older account to a new account, the new account is considered new credit.
6. Limit your number of credit applications and credit checks
It’s normal and expected that you’ll apply for credit from time to time. When lenders and others ask a credit bureau for your credit report, it’s recorded as an inquiry. Inquiries are also known as credit checks.
If there are too many credit checks in your credit report, lenders may think that you’re urgently seeking credit or trying to live beyond your means.
- Limit yourself to one or two cards
It makes record-keeping simpler, and it removes the temptation to abuse credit. Also, beware of retail credit cards, as their interest rates are typically higher than those charged by the major credit card companies or financial institutions.
In a world filled with reward credit cards and other flashy loan offerings, it’s easy for Canadians to take out much more credit than they need.
- Alert banks and card companies when you move
You don’t want to see your bills have gone unpaid because the mail didn’t go to the correct address.
- Avoid ever being sent to a collection agency
Pay off delinquent bills. The worst thing that can happen to your credit history is having your debts in a collection agency. Avoid collection agency like a plague.
Now that you know how to build your credit history, go ahead, and watch your credit score go up.