Common sense of using credit cards when immigrating to Canada

In Canada, the easiest way to establish credit is to apply for a credit card, and then prove that you can use it responsibly by swiping it and repaying it in time. For Canadian immigrants, if they often use credit cards and pay off their loans on time, their credit scores will increase. 86 According to experts, the Credit Bureau of Canada provides two kinds of information to display your credit history, Credit Report and Credit Score. Equifax and Transunion, Canada's credit bureaus, use 3 to 9 points to define credit scores. The personal credit score provided by Equifax is called Beacon Score, while that provided by Transunion is called Empirica Score.

when banks or financial institutions apply for loans, they often see the requirements for Beacon score, and the dividing line is usually 68 points. Those with a score above 68 are generally considered to have good credit, while those with a score below 68 are often subject to some restrictions when applying for loans.

For example, banks will demand higher income, down payment or simply higher interest rates. Although it seems that 68 is an average, in fact, the credit score of Canadians is much higher than this, so don't be complacent if you fail. If you want a better loan repayment rate, try to improve your credit score.

The calculation method of credit score is an American patent. Like the secret recipe of Coca-Cola, it is kept secret. On July 22, 1999, Fair Isaac demonstrated a calculation model of credit score when testifying to the Federal Trade Commission.

The calculation formula is very complicated, but it is divided into the following items:

1. Credit card repayment record;

　 2.? Each use/repayment amount of the credit card;

3. the length of credit history;

　 4.? Latest credit time;

　 5.? Credit category;

6. Number of credit records;

　 7.? Credit activity.

weight from more to less. Among them, the most important factors that determine the credit score are: payment record, whether there is a bankruptcy record and the amount of unpaid debts. How to improve the credit score:

Payment history of credit card:

Credit card debt must be repaid on time. Although paying only the minimum repayment amount will not reduce interest, paying tens of yuan before the final repayment date can keep your credit history unaffected.

of course, credit institutions are not always so harsh. Generally speaking, you can breathe a sigh of relief by paying at least the minimum repayment amount required by the other party within one month after the last repayment date? It won't be deducted.

Of course, you can also apply for automatic transfer, automatically deduct the minimum repayment amount required by the credit card from your bank account every month, and then pay the full amount when you are free. This is also a simple solution.

Secondly, pay all kinds of arrears in time and maintain sufficient payment capacity in the bank trading account. Although the overdraft of the bank account will not affect the credit score, if we apply for the automatic deduction service of water and electricity charges, the public utilities will be very concerned about the check bounce.

The bank describes the credit rating of Trade Line as R plus a number, R1 means that you have been paying on time, or no later than 3 days after the final repayment date, and it will become R2 after more than 3 days, and so on. As the number increases, your credit score will also decrease.

after paying off the debt, your Trade Line will change back to R1. However, grades other than R1 will be recorded by the credit company and written into your credit report history. Bad records not only affect your credit score, but also customers with credit history problems will be treated strictly in the process of applying for loans, which is not a good thing. It may take you 1-2 years to establish a perfect historical record before you can apply for a loan.

To sum up, credit card repayment records are very important for credit scores and loans. If you really encounter personal financial difficulties for a period of time, you must also insist on paying off the minimum repayment amount every month, and never delay payment. Of course, always paying off the minimum repayment amount is not the choice of most people, and the interest rate as high as 19.5% (or even higher) will definitely hurt you.

each use/repayment amount of the credit card:

The higher the upper limit of the credit limit, it can not only prove your high credit, but also prove your high spending power. However, the higher the credit card, the better. Too high a credit card limit will not only cause greater losses when it is stolen, but also will not be more helpful to improve your credit score. Of course, if you have a high credit limit, and you can maintain a good balance between the credit card usage limit and the credit limit, then a high credit limit is beneficial to you.

so what is the most cost-effective amount of credit line? Generally speaking, it is recommended that the amount you use should not exceed 3% of the maximum limit of your credit card, up to 5%. If your credit card is basically full every month, the system will definitely judge that you are over-reliant on the credit card and will reduce your credit record.