Question: How can I build good credit in Canada? What steps should I take to get started? I just started a new job and want to start right.

Answer: One of the easiest, most effective ways to start building a credit history is to get a Canadian credit card. If you do not have a credit history, you may benefit from a secured credit card. With these types of cards, you decide how much credit you think you’ll need or can afford, and then deposit that amount with the bank as security. This amount becomes your credit limit.

For most people, all you need to do is bring some personal information and identification into a bank branch, where a bank representative can get you started on your credit card application.
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Depending on the type of card you choose, you can earn rewards points that you can redeem for merchandise and you can include a co-applicant who will also receive a card for your account.

The only difference is that, with a secured card, you decide how much credit you think you’ll need and then deposit that amount as security.  For example, a $1,000 security pledge would give you a credit limit on your card of $1,000. This is a great way to start as it does not require a prior credit history.

The money you deposit as part of your security pledge is placed in a Guaranteed Investment Certificate (GIC). It will earn interest and grow while you build a credit history. Once your credit rating is established (which can take up to 18 months), your GIC security will be released from your credit card account.  

There are benefits to having a credit card so you should consider whether getting a credit card may be appropriate for you. It will help you establish your own credit history and help put you in a good position for the future. In addition, always make sure you pay your bills – on time and in full – as this also affects your credit rating.  

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