Understanding the credit report upon arriving in Canada
Before granting you credit or signing a lease, for example, we might, with your approval, look at your credit report. Here are the explanations of our experts to understand what it is and how to build a good credit rating.
What is a credit report?
“Your credit report summarizes your credit history in particular,” explains Pascale Arès, product manager, credit cards at the National Bank. It includes, among other things, the places where you worked and the addresses where you have lived in recent years. Your file also includes information on the loans taken out and your payment habits such as the date of opening an account, its credit limit, the outstanding balance and its payment terms. "
Your file includes a credit score, which some also call a score. This is a three-digit score varying between 300 and 900. “This rating changes frequently and is updated over time,” says Pascale Arès. Several elements influence it. Your credit rating depends in particular on how you use credit and on your thoroughness in paying your bills. "
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Why is it important to have a good credit history?
When applying for a loan, your rating is decisive in the decision of lenders. The higher your score, the less likely it is to lend you money. Other things can also be taken into account, such as your income, your job and your assets.
Whether you're thinking of buying a home, applying for a car loan, or starting a business, a good credit report will help you get things done. “Students who are thinking of opening a dental clinic or an engineering firm are told that, in order to get a loan from the bank, the credit file is the main ally. It demonstrates their ability to manage the credit granted to them, ”says Sylvie Coulombe, Director, Partnerships, Newcomers at the National Bank.
“It is one of the foundations of the Canadian banking system. It allows lenders to assess the level of risk a loan represents. It is important to understand that not all credit mechanisms work the same across the world. This is why it is essential for anyone arriving in the country to take the time to learn about the specifics of our system, ”adds Sylvie Coulombe.
Understanding how the personal credit report works helps maintain a good credit rating. Lenders may then be more inclined to provide you with financing.
How to build your credit report?
Your credit report is created from the moment your first credit application is accepted. While some financial solutions are available to those without a credit history, it is easier to get a loan when you have a record that includes a credit history.
For newcomers and young adults, the easiest way to create a record is to get a credit card from a financial institution or take out a line of credit.
“We recommend that newcomers and students start using a credit card as soon as possible to build their credit history. Above all, to use the latter optimally by repaying it in part or in full at the latest on the due date, "explains Sylvie Coulombe.
If your credit rating has been affected in the past, you can still take the initiative to improve your rating. “There is a way to rectify this by sitting down with a counselor to understand your behaviors that have affected your credit rating. You can then put a plan in motion to improve it, and move forward with your plans as soon as possible. "
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How to get your credit report?
Your file will be provided on request by a credit rating agency, also called a credit bureau. You can get your rating for free by contacting her by phone or email.
If you are applying for credit at the bank, your advisor will need to review your credit report. “He can then turn his screen and explain your credit rating to you,” explains Sylvie Coulombe.
“Because your credit report includes information about you, it is highly confidential. "
How do you know if your credit rating will allow you to buy a property?
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