By Tua | July 12, 2017
Good credit has the power to change lives. For graduating students entering their careers, it’s the difference between qualifying for an apartment or renting a car for the weekend. For recent new Canadians it can have even greater consequences—like the ability to get a mortgage, a family vehicle, or a small business loan. For both, it can determine credit approval and rate of interest. Let’s explore credit, how to build it, and what to watch out for.
Newcomers are the backbone of Canadian society, and we celebrate our multicultural nature. But newcomers can be also financially vulnerable. Learning the ins and outs of a new financial system is tough—let alone those who aren’t accustomed to our culture or language. 88% of new Canadians realize they need good credit history to fulfill their goals, however 45% do not know how to get it.
So, establishing credit is a priority. One of the best and easiest ways to establish credit is by getting a credit card and paying it on time. In addition to demonstrating good money management skills, credit cards help keep track of purchases and payments.
Banks typically expect up to 18 months of clean credit, and things like net worth, saving habits, and having resources to repay. However, alternative lenders, like Tua, also consider more human factors, such as goals, aspirations, and potential. Considering the top three goals of newcomers are down payments for a home, saving for kids’ educations, and getting a car, establishing good credit is important. Plus, new Canadians have a higher likelihood of being responsible with credit. This step in the right direction captures how loans can be a positive force in society—a gateway to a newer and better life.
Student loans are provided to more than 491,400 full-time and 11,300 part-time students enrolled in higher learning—that’s half of Canadian students. Loan repayment starts 6 months after students end their studies. Average student debt? $28,000. Many assume they’ll have a job to help them afford it; true for the 30% who pay their student loans within three years. For others, it doesn’t exactly go as planned—and thousands simply can’t repay their debt.
Students should take care not to skip payments for more than 90 days (or worse, fall into default). Canada Revenue will come for the money through GST and income tax refunds, wages, and even legal action. After that, collection agencies will report to the credit bureau, and can affect graduates chances of getting car loans, mortgages, credit cards, apartment, or even a job.
That’s no way for anyone to get started. Tua has ways to consolidate student debt or get a sponsor loan to help pay them off.
Student loans represent one of the first major credit experiences in a young person’s life. Responsible credit behaviour can actually build good credit for people starting out. At Tua, we have simple solutions to help new Canadians and careerists get on the right track to build good credit, whether that is through debt consolidation or a home improvement loan, our interests are in everyone’s best interests. Always!