Obtain a credit card
We cannot stress enough the importance of having a credit card. North America as a whole is a credit card society and there is a huge emphasis on having a “good credit rating”. Need a bank loan? The bank will first check your credit rating. Seeking a mortgage to buy a home? Ditto on the credit rating.
Not having a credit rating is worse than having a poor rating – at least in the latter case you can still find lenders, though you’ll be charged a much higher interest rate.
Unless you have lived at some point in the United States, you will start life in Canada with a zero credit rating. This also means you will find it extremely difficult to obtain a credit card. Financial institutions in Canada care little even if you have held a major card in another country – what matters is having some credit history in North America.
So how does one go about getting this elusive piece of plastic? First, try to persuade your bank to accept your credit application. If you have a large enough balance (and your luck is in), you just might get it.
Most banks will turn you down, but a significant number will agree to give you a card on the condition that you put an amount two to three times the maximum credit sought into a term (fixed) deposit. If you are strapped for cash, go for a card with a low maximum spending limit, say $500. Remember, the amount itself is not important, it’s the ability to be regarded as “credit-worthy”. Once you have your first card, getting other credit cards and higher spending limits is easy – in fact, don’t be too surprised if the banks that turned you down the first time start hounding you to sign up with them!
If you are married, get your spouse his/her own credit card as well (not a supplementary one). This way, when you are ready to make a major purchase, such as buying a house, both partners will be able to show “credit history” which is so important to securing a loan or mortgage.
To build this history and maintain a good credit rating, make sure you use the card regularly, even if just for purchasing groceries, and more important, pay your card bills before the due date.
All major banks and financial institutions offer credit cards, but the schemes and services available vary. The most widely accepted cards in Canada are Visa and MasterCard, though many institutions will also take American Express or Diners Club. Many banks today offer cards without any annual fee and these should be your first choice when you apply for one.
Other banks have annual fees ranging from $15 and up for premium cards (such as Visa Gold), with services such as loss or damage insurance thrown in. If you feel you need these extras, by all means opt for the premium card instead.
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