As an immigrant, establishing a credit history is important because in your infancy as a Canadian you will need money for basic necessities of life such as food, shelter and clothing. Establishing a good credit history will make applying for things such as credits cards much easier, because you can accumulate money over time to pay off debt. Prepaid credit cards are perfect to establish credit and build credit history.
For starters a credit history is a record of your ability to borrow and repay loans on time. It is a key piece of information that a financial institution will review when considering whether to grant you credit. A good credit history shows your ability to repay any borrowed money on time. Not adhering to these payments can result in making it difficult to borrow more money in the future. Part of the problem people face with credit is that they do not know how to manage their money. These next few tips will also include vital budgeting tips so you can maintain good credit and kick start your life.
Check and understand credit reports and scores. Whenever a person opens any sort of account with a bank or other lending institution, any activity on the accounts is listed in these reports. Lenders go to these companies to see how big of a risk a person is before deciding to extend credit. A credit score is a three-digit number given based on the sort of credit extended by and payments made to lenders. The higher the score, the less of a risk one is considered to be. Your credit score will follow you throughout your life and track your spending habits.
Save on interest charges and over-the-limit and late fees by switching from a credit card to a prepaid MasterCard or Visa prepaid card. Using a prepaid credit card removes the hassle of dealing with credit card debt and interest fees. In this way you could maintain a good credit score without worrying about unpaid debt.
Use prepaid cards instead of cheques, Enter your prepaid card number online in the same way you would use your credit or debit card to pay a bill. This will remove worries of overspending on checking accounts before the cheques for bills can clear. It’s also better because when paying bills you know that the money is in the prepaid cards.
Use prepaid cards instead of cash. Having a prepaid card in hand is much more convenient and ultimately safer than having envelopes of cash with a value of $1000 or more. And if you like to do your shopping in the comfort of your home, then a prepaid credit card is right for you. When we use cash, it is difficult to track where that money was spent – unless you are a professional with organizing receipts. With prepaid credit cards you can easily track your expenses and make appropriate decisions when it comes to spending. For instance you can receive daily alerts through email or message notification to tell you when you’ve reached your spending limit.
Limit your spending by adding only the money you have budgeted for specific purchases – Have different credit cards for different purposes.
Budgeting with prepaid credit cards is useful if you want to set a specific budget for purchases. For instance you can have prepaid credit card for weekly grocery shopping and limit the amount at $200 so you do not overspend. Furthermore, when you have a prepaid credit card labelled with a specific purpose it is less likely for you to spend that money. For example you can have various cards for various purposes – groceries, phone bills, gym memberships, vacations, leisure activities, etc.
There are many opportunities for immigrants to achieve financial stability because companies and organizations have special finance packages and deals for people with bad or no credit. These tips may seem overwhelming to new immigrants because of their inexperience with managing credit. As a child of immigrant parents I understand the pressures and challenges you may face in this new, not to mention very cold country. But as long as these strategies are practiced responsibly and correctly it will be no time until you lease a car and buy your dream home!