How to get a credit card in Canada
Well, you apply. But make sure you’re applying for the right card and that you have a high chance of being approved. You see, the credit card company will check your credit history, and that can affect your current credit score. So, don’t apply for a bunch and hope for the best, as that could make it look like you are at risk for having access to too much credit. The good news: There are many types of credit cards in Canada, including those for newcomers to Canada, students and even those with bad or no credit. Check out our rankings for the best credit cards in Canada for your situation.
Once you have a credit card you will want to maintain good credit habits, like paying it off on time and paying more than the required minimum payment. Here are some other articles that will help you navigating your first credit card in Canada.
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Why is credit history important?
Say you want to rent an apartment. Your credit history is vital because most landlords will want to see your credit score and credit report to judge whether you’ll pay your rent on time. If you get the apartment, you’ll want an internet connection—and for this, too, the large providers will query your credit score.
If you need to buy or lease a car, your credit history will not only determine whether you’re approved for a loan, but also what interest rate you’re offered: the higher your credit score, the lower the interest rate. Insurance companies may check your credit history before providing coverage. And finally, if you want to buy a home, your credit history is key to qualifying for a mortgage, as well as what mortgage interest rates lenders will offer. A lower rate could save you tens of thousands of dollars over the life of your mortgage.
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How to build a good credit history when you have no credit history
Credit history is usually built organically as people start using credit. In Canada, young people who have reached the age of majority (18 or 19, depending on where they live) can apply for a credit card and start building a history of borrowing and repayment.
If you’re a newcomer to Canada, or if you’re a student, recent grad or young adult who doesn’t have much of a credit history, your credit score may be low—which is a hurdle in getting approved for credit. It’s a frustrating cycle—you need credit history to access credit, and you need credit to build that history. So, what’s the solution? Here are a few steps anybody can take to build their credit history:
