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What You Need to Know

As a newcomer to Canada, it’s important to build a credit history here and use credit to your advantage. If you need to borrow money in the future, you’ll enjoy more favourable terms (like a better interest rate) if you have a credit history and a good credit score.

Understanding Credit Score and Credit History

What is credit?

Credit is a way of borrowing money. When you repay the money, you pay the lender (such as a bank) principal and interest. The principal is the original amount you borrowed, and the interest is a charge that compensates the lender for using their money.

What is a credit history?

In Canada, your credit history contains facts gathered from financial institutions, retailers and lenders about how you have handled credit in the past. Most of this information stays in your credit file for seven years.

What is a credit score?

Canada’s central credit bureaus use your credit history to give you a credit score (or credit rating), a number that reflects how well you have borrowed and repaid money. Lenders look at your credit score to decide whether to lend you money (and how much). The higher the score, the better!

Why is a good credit score important?

A good credit score helps you qualify for loans and lower interest rates when you borrow. This will help you buy a car, get a mortgage, pay for school, qualify for lower rate credit cards and more. Having a good credit score can even help you save money on your cell phone plan.

Build Your Credit History the Easy Way

Having a Canadian credit card and making regular payments on it is the easiest way to establish a credit history and build a good credit score in Canada, which can help you qualify for other borrowing options and lower interest rates in the future.

A credit card provides other benefits as well:

  • It’s a convenient way to shop and pay for services without carrying large amounts of cash.
  • It’s often needed for certain purchases, such as setting up a contract for a mobile phone, renting a car or shopping online.
  • Purchases made in Canada using a Canadian credit card are not subject to exchange rate costs.
  • You can often use your credit card as a form of identification.
  • If you have a cash back card, such as the RBC Cash Back Mastercard, you can earn cash back credits.
  • If you have a rewards card, such as the RBC Rewards+ Visa, you can earn RBC Rewards points. (RBC Rewards is a rewards program that lets you earn points when you use an eligible RBC Rewards card. You simply pay for purchases with your card, earn points on those purchases, and then redeem your points for rewards like gift cards, travel and merchandise.)

10 Tips for Using Credit Wisely

If you’re new to using credit, consider these tips for managing your credit effectively so that you don’t accumulate too much debt or pay more than you should on interest charges.

  • Pay on time.

Make your payment on or before the due date on your credit card statement. Late payments may affect your credit rating, and there may be fees or penalties.

  • Use credit only for items you can afford.

Keep purchases within budget so you can pay off your bill every month.

  • Pay more than the minimum.

If you can, pay off your credit card balance in full each month. If you can’t pay the full balance, make at least the minimum payment by the due date. (You will be charged interest until the entire balance is paid off.)

  • Avoid cash advances except in emergencies.

If you use your credit card for a cash advance, the interest on the cash advance is charged right away.

  • Use a line of credit for larger expenses.

Interest rates are typically lower on a line of credit than a credit card.

  • Pay off higher interest credit first.

For example, if you owe money on a credit card and a line of credit, make minimum payments on both and put any additional money against your credit card to save on interest costs.

  • Review your monthly statement for accuracy.

Keep your receipts and check them against your statement.

  • Limit the cards you use.

That way it’s easier to monitor your spending and keep track of the money you owe.

  • Protect your PIN.

Memorize and never share your personal identification number (PIN) with anyone.

  • Report a lost or stolen card immediately.

Call your bank and let them know so you are protected from any unauthorized use of your card.

The RBC Newcomer Advantage

We know that you and your family have unique needs. Let us help. With the RBC Newcomer Advantage1 you can get everything you need for a great financial start in Canada. We are Canada’s largest bank* and leading financial institution, and we’ve been providing advice and solutions to newcomers for over 150 years.

We Have the Right Credit Card for You

Choose the type of card you’re looking for below to explore your options.

Personal Credit Cards

Enjoy the convenience and worldwide acceptance of a credit card from RBC. Choose from a range of premium and no annual fee cards.

Student Credit Cards

Start building a credit history while you’re a student and simplify your life with one of our popular cards for international students.

Business Credit Cards

Manage your business expenses, simplify your day-to-day tasks and invest in your business with a flexible business credit card.