Building Your Credit As a New Immigrant
There are many factors when in comes to deciding to immigrate to Canada and your credit and history is a major component to immigration. Specifically, credit history is not transferable from your native country to Canada. What does this mean for consumers who are looking for a better life in Canada? From a credit point of view, it means immigrants to Canada need to start from scratch when it comes to credit score.
There are several ways for new immigrants to build their credit in a new country. The easiest way is to apply for a secured credit card. These types of cards require a deposit that serves as collateral in case a borrower defaults. The credit limit on the account will be reflected by the deposit provided. In most cases an annual fee will be associated with the secured credit card that will require to be paid on a yearly basis. Secured credit card payment history will be recorded to the two major credit bureaus in Canada, TransUnion and Equifax. If consumers manage the account well, they will be able to build their credit history over time, eventually replacing the secured card with an unsecured card.
Bank Alternative Lenders Not Credit Focused
Another method to building credit is obtaining a used car loan from a bank alternative lender. These types of lenders work with consumers who have little to no credit history, low credit scores or even no credit. While traditional lenders base their lending criteria on rigid parameters that include a credit history and credit score, bank alternative lenders are more flexible in their lending criteria. For new immigrants to Canada, bank alternative lenders look at a newly immigrants housing and employment status, bill payment history and monthly income. A security deposit may be requested from a new immigrant if there is not sufficient information established at the time of loan application.
Bank alternative lenders help immigrants to build their credit history in Canada by providing loans to consumers that would otherwise not have the ability to obtain a loan. With affordable payments that are manageable, immigrants to Canada can build their credit history by making regular and on time payments. Without the ability to get used car loan financing with a bank alternative lender, new immigrants would not be able to purchase a used vehicle in the traditional banking environment.
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