Immigrants need help accessing credit

By Staff | June 25, 2013 | Last updated on June 25, 2013
2 min read

Most immigrants don’t know how to navigate the Canadian banking system. In their first three months, they’re confused about how to open a bank account (47%), apply for a credit card (58%) or a mortgage (87%), or send money to family overseas (72%), finds a TD survey.

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Given that Statistics Canada says immigrants will account for 90% of Canada’s population by 2055, these findings are troubling.

Further, new Canadians are having a hard time with the credit rating system, and not having access to credit right away.

“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,” says Stephen Menon, associate vice president of credit cards at TD Canada Trust.

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Here’s how to help newcomers build their credit ratings.

1. Apply for a secured credit card

“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,” says 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.

Read: 4 ways to save cross-border tax “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,” he warns.

3. Check your credit rating before applying for a mortgage

Farhaneh Haque, director of mortgage advice at TD Canada Trust, says 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 says. “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.” staff


The staff of have been covering news for financial advisors since 1998.