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Expert Advice: Helping newcomers build credit ratings

Do you have a financial question that's keeping you up at night? Ever wished you could get a second, or third, opinion on what to do with your money? Here's your chance: Bankrate.ca hosts a monthly feature whereby you submit a question, and we ask industry experts to weigh in. The topics are up to you—you ask the questions, and we'll get the answers.

Here's this month's question: "I'm new to Canada and I'd eventually like to buy a home. How can I build my credit rating so I can qualify for a mortgage?"

For many newcomers to Canada, buying a home is an important goal. However, navigating a new country, with different financial, credit and lending systems can be daunting.

When people arrive in Canada some have vast savings, others little more than the clothes on their back. While many start off renting while they get established and familiarize themselves with their surroundings, thoughts often turn to home ownership.

However, it's a long and expensive process. If financing is part of the equation then your credit score plays a key role in your ability to borrow money and the rate of interest for which you qualify.

Your credit score is a number from 350 to 800 and is based on your credit management history -- paying bills on time, length of credit history and amount of available credit. (If you have a $10,000 line of credit and $2,000 owing, your available credit is $8,000.)

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The higher your score, the better, and there are a number of things people can do to build and improve their score in order to secure the best possible mortgage.

Paul Sy, director, newcomer & multicultural markets, RBC
"Our research constantly shows that saving for and owning a home is one of the top financial goals a newcomer has," says Sy. ""The first thing newcomers should look to do is build a credit history."

"Our research constantly shows that saving for and owning a home is one of the top financial goals a newcomer has," says Sy. ""The first thing newcomers should look to do is build a credit history."

In a recent RBC poll, newcomers were asked what financial considerations they thought were important to starting a new life in Canada.

  • 79 per cent feel it's important to start building credit history quickly
  • 75 per cent believe that expert advice is important when it comes to lending or borrowing money
  • 68 per cent say that using credit cards is a smart way to manage their finances and expenses

"RBC has programs and policies designed to help newcomers achieve their goals," says Sy. RBC's 'Welcome to Canada' package offers advice and tips to help people get settled, includes free banking with unlimited transactions for six months and a new preferred rate on foreign exchange transactions for up to 12 months.

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-- Posted July 4, 2012
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