Establishing a strong credit history important for newcomers to Canada
July 7, 2016
Navigating finances and establishing a good relationship with your bank can be a challenge for many Canadians at the best of times.
But for those new to Canada, it can be even more difficult.
Elizabeth Mulholland, chief executive at Prosper Canada – a company that works to improve financial literacy with a focus on low-income Canadians – says language isn’t the only barrier.
“One of the issues when you’re dealing with people from different parts of the world is, in some places you can’t trust your public institutions or your governments,” she said.
Even though many newcomers are already financially literate, Ms. Mulholland adds, they need to learn a new system and may be a target for scams that prey upon their lack of familiarity.
“A lot of what we’re working on with people initially is what’s normal here and who you can trust and who do you have to be a little bit careful about,” she said.
Establishing credit is a key step for newcomers because their credit history before coming to Canada is generally not recognized.
Mushtak Najarali, vice-president of everyday banking and cross-border banking at TD Bank, said whether new Canadians come to the country with assets or not, building a credit history is important.
“One of the [misconceptions] is: ‘I don’t need credit or a credit history because I’ve come with assets,’” he said.
To start building a good credit history, Mr. Najarali suggests newcomers get a credit card and be sure they make their payments on time.
A TD survey suggested that 88 per cent of new Canadians considered establishing good financial standing in their first year after arriving a top priority, but 45 per cent didn’t know where to start.
The online survey conducted between April 26 and May 10 by Environics Research Group polled 502 adults born outside of Canada who moved to the country within the past five years.
The survey also found that the top three financial goals of new Canadians included saving for a down payment for a home, saving for their children’s education, and buying or leasing a car.
Mr. Najarali advises newcomers to take advantage of any financial education that is available from their bank.
“It is important that they find the right support from their bank,” he said.
Puneet Mann, director of branch customer experience and multicultural banking at Scotiabank, said depending on where they are coming from, newcomers can open a Canadian account even before they arrive and wire money into it.
“That also allows new immigrants to use their bank statement to show proof of funds when they land, which is a requirement for the government,” she said.
“And then when they get here, they get really quick access to their money.”
Ms. Mann says from the bank’s point of view, newcomers to Canada are good customers.
“We’ve done lots of analysis … and we find often that newcomer customers are actually much more responsible with credit, they’re quicker to pay credit off and they want to make sure they’re doing the right thing when they get here.”Back