How do I access credit? New Canadians face learning curve

TD Canada Trust provides advice on how to establish a good credit rating in Canada

TORONTO, June 25, 2013 /CNW/ - 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%), apply for a credit card (58%) or mortgage (87%) or send money to family overseas (72%) in their first three months in Canada. The biggest surprise new Canadians encountered setting up their finances was the credit rating system (24%) and not having access to credit right away (23%).

"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:

1. Apply for a secured credit card

According to the poll, a quarter of new Canadians (23%) 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.

"A secured credit card has all of the advantages of a credit card, but requires that a certain amount of money be set aside to provide the bank with the security that the money will be paid back," said Menon. "If used responsibly over time a solid credit history can be built by paying credit card bills on time until eventually the credit rating is high enough to apply for an unsecured credit card."

2. 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% of newcomers pay their bills through online banking and 30% use a mobile app on their smartphone or tablet for banking services.

"If you can't afford to pay an entire bill, think about setting up an automatic transfer of the minimum monthly payment to avoid negatively affecting your credit rating," said Chun. "And remember, even if your utility company gives you an extension on your monthly bill, your credit rating may still show that you paid it late."

3. 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% 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. "An expert can help calculate what's affordable and provide guidance on how to budget to service mortgage payments, live comfortably and save for the future in Canada."

TD Canada Trust and New Canadians

Language can be one of the biggest challenges for newcomers when they arrive in Canada; 41% found communicating difficult when they first arrived and 55% 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.

* Statistics Canada: Canadian Demographics At A Glance, 2008

About the TD Canada Trust New Canadians Poll:

TD Canada Trust commissioned Environics Research Group to conduct an online custom survey among 648 new Canadians 18 years of age or older who moved to Canada within the past five years. Responses were collected between May 7 and 21, 2012.

About TD Canada Trust

TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.

Image with caption: "Moving to a new country is exciting, but it can be hard to know where to begin, especially when it comes to finances. When you arrive, you should open a bank account and learn how to save, manage and grow your money in Canada. (CNW Group/TD Canada Trust)". Image available at:

SOURCE: TD Canada Trust

For further information:

Sheri Papps
Paradigm Public Relations

Sandra De Carvalho
TD Bank Group


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