Six-in-10 (60 per cent) newcomers lack confidence in their financial knowledge, particularly about using credit, during their first year living in Canada, according to research by RBC Royal Bank. But confidence rises the longer new immigrants are in the country, up to 92 per cent among newcomers who have lived in Canada between two and five years.
Establishing a new life in a new country can take up a lot of time and money, but planning can make the transition much smoother.
“You want to feel at home as quickly as possible, but you don’t want to drain your savings upon arrival with unexpected costs,” said Paul Sy, director, Multicultural Markets, RBC. “Uncertainty can be overwhelming as you start a new life in a new country. But the right advice and financial tools are important to ensuring a stable future.”
Sy offers the following tips to help make the first year of living in Canada more manageable:
• Put together a financial plan –Whether it’s buying that first home, or putting your children through school, creating a financial plan as soon as possible will help you stay on track to achieve your goals. Sitting down with a financial professional to go through your immediate expenses can help to ensure easier settlement in Canada, while staying on the right financial track to build your new life.
• Make sure your money is working for you – Growing your money is important to building a strong future. There are many options available that let you save your money and generate returns to help to build your wealth
• Start building your credit history from day one – It is essential for newcomers to establish a Canadian credit history. This helps lenders assess you as a client and makes it easier to access credit for the purchase of a car or house down the road. One of the best ways to do this is to have a Canadian credit card and use it wisely.
Managing Credit in Canada
Among the above tips, building a credit history in Canada is actually listed as one of the top challenges facing thousands of newcomers that settle here every year, with many feeling “overwhelmed” by it, according to RBC Royal Bank research.
Almost one-fifth of newcomers (17 per cent), who have been in Canada less than a year, say they feel overwhelmed by all the talk about the need for credit history. That number more than doubles to 43 per cent among newer Canadians the longer they are in the country.
“Our research shows new Canadians understand that building their credit history is an important part of establishing their life in Canada, particularly when they are ready to buy a car or house,” said Paul Sy, director, Multicultural Markets, RBC.
Misconceptions abound when it comes to credit building for newcomers to Canada. Some believe your credit profile improves if you earn a lot of money or that it depends on your age. But lenders look at a host of factors when you want to borrow money, including your credit history, ability to pay bills and your total net worth.
Here are some tips to help set new Canadians on a strong credit path:
• Build your credit history as early as possible. Getting a credit card is often the easiest way to start building a credit history. By making purchases and paying them off on time each month, you are establishing a record of responsibility.
• If you are unable to pay the balance on time , make sure to at least pay the minimum balance. You’ll save on interest charges and still help build your credit history.
• Check your credit report at least once a year to make sure it’s accurate. You can request your report from Equifax or TransUnion, two credit reporting agencies in Canada, to see where you stand. A score is on a scale from 300-900 and the higher the score, the better your credit.
To learn more about how RBC helps newcomers get financially prepared for life in Canada, please visit: rbc.com/needcredit