Having no credit can seem like a good thing. However,it can negatively impact your finances, especially if you are new to the country and need finance to buy a car. A lack of credit also makes it difficult for people to find rent accommodation because they do not have a financial trackrecord. You may also have to pay a higher deposit for utilities or end up with minimal options in case of emergency expenses.
Why Do People Have No Credit?
There are few reasons people don’t have a credit score. They may prefer to pay for everything in cash. Some people are averse to using credit cards, choosing to use their debit cards instead. Without credit card usage, credit bureaus can’t pull a report. Or they could be just starting out on their own or new to the country. People who migrate to Canada mustrebuild their credit because the credit history from their previous country isn’t considered.
Difference Between No Credit and Bad Credit
Bad credit is when you earn a low score on your report because you’ve either missed payments, defaulted on loans, had liens, or made similar poor credit choices in the past. A bad credit score is defined as a score below 630.
Zero credit is when you don’t have any credit history at all. Technically, you cannot have a credit score of zero because the lowest possible score is 300. However, until you begin to build credit, that score can impact you negatively.
How to Build Credit
If you are new to Canada, there are several ways to build credit.
1. Apply for a Credit Card
Many banks offer unsecured credit cards as a part of their Welcome to Canada package. Although they may have a lower credit line of credit, it can be a good place to start. If you are not eligible for an unsecured card, apply for a secured credit card where you make a refundable security deposit.
Your purchases and repayment with the credit card will be reported to the credit bureau and build your credit history.
2. Apply for a Loan
At East Coast Financing, we offer Nova Scotia car loans to customers irrespective of their credit history. If you have bad credit or no credit, you can still drive away with a new car in less than four hours. Visit us if you are looking for Nova Scotia auto financing.
3. Apply for a Mobile Phone
Some telecom service providers offer services to people with no credit history but at a higher cost. But you will likely have to choose a post-paid plan to build a credit history.
4. Apply for a Credit Builder Loan
Credit builder loans are designed for people looking to build a credit history. You will get small loan amounts that can be quickly repaid. In addition, the lender typically looks at other factors like social media profiles and bank transaction history.
