WES Advisor Blog

Trusted Advice for Academic and Professional Success

Canadian Banking: How Newcomers Can Build Credit

Wednesday | May 8, 2019 | by Ivy Chiu

how do I build my credit

Moving to a new country presents the unique opportunity to create a life, home, career, and network in a new environment. By taking time to understand the financial system, newcomers to Canada can create a solid foundation that could mean the difference between surviving and thriving during the first few years. While most newcomers are aware that Canada’s banking system differs from that of their home country, they often do not know what those differences entail.

Keep reading to see tips on how to bank and build credit in Canada:

Open a Bank Account Even if You Do Not Have a Job Yet

Many newcomers are surprised to learn that they can open a bank account without having a job. In their home country, they might not have been allowed to do so without being employed with a steady income. However, in Canada, opening a bank account is one of the first things newcomers should do—even if no funds are deposited right away.

The main types of accounts in Canada are chequing and savings accounts:

  • A chequing account is designed for day-to-day banking. You will use the money in this account to make everyday purchases. With this account, you can deposit and withdraw at any time. This makes it a convenient and safe place to keep money.
  • A savings account is ideal for setting aside money for larger costs, such as education or home furnishings. The balance in this account will earn interest and you can easily access your money when you need it.

When exploring options, ask about bill payments and the number of transactions that can be made every month without fees. Be sure to compare fees and interest rates for the different accounts, as well as features and offers. For example, RBC offers no monthly fees for newcomers for a period of time to help with settling in a new country. As long as you keep your account open for 90 days, there is no fee to close the account if your situation changes or you decide not to live in Canada permanently.

Start Building Credit Immediately

Many newcomers understand that building credit history is necessary to settling in Canada. But they may not know exactly how it works.

Credit history in Canada is a key factor to determine eligibility for a loan.

Canada’s central credit bureaus use credit history to provide a score that reflects credit worthiness. A credit score is built through financial transactions, such as the first time newcomers ask for a loan, set up utilities, or purchase a mobile plan—and it is built over time. The score is determined based on the evidence of how finances and repayment were managed. This is influenced, for example, by whether monthly bills are paid in a timely manner.

A good credit score helps newcomers qualify for loans and might lead to lower interest rates. This is helpful when buying a car, getting a mortgage, paying for school, and more.

Here are a few more important points about building and maintaining a credit score:

  • A credit score is tied to the individual. If the credit card, car loan, or mortgage is in your spouse’s name only, the activity associated would be tied to the spouse’s credit score. Each person should build their own credit history.
  • Pay your bills on time. Credit scores are maintained by credit reporting agencies and include whether bills are paid, including utilities, mobile phone, and credit card. This is why it is important to pay at least the minimum payment on time.
  • Regularly check your credit score. RBC personal banking clients can access their credit score right through the TransUnion CreditView Dashboard in their RBC online banking portal. Checking your credit score at least once a year helps detect any errors and protects against identity fraud by ensuring the information is accurate.

While every newcomer to Canada has their own set of distinct goals and circumstances, most are eager to learn how to navigate the Canadian financial language and landscape.  Do not hesitate to ask your bank’s client advisors about any questions you may have.

Starting a new life in Canada will be easier with a solid understanding of how to manage finances and build credit history. A promising future awaits.

For assistance with getting a bank account, credit card, or mortgage in Canada, visit rbc.com/newcomers.

Related Reading

Build Your Credit as an International Student

How to Use Your International Credit Score in the U.S.

Ivy Chiu is Senior Director of the Newcomer Segment at RBC Canada.