New Credit

One of the largest challenges young people face is getting credit when they have no credit to show a track record. Their are some suggestions for this: RRSP Loan from your bank, secured credit card from Home Trust Visa, opening a joint card(piggybacking), or getting a car loan for new credit. An RRSP Loan from your institution might allow you to borrow money with guarantee. How some institutions do this would be to lend you $1000 for an RRSP and when you pay in full the RRSP funds becomes your money(of course in form of RRSP). The institution would take the money out of your account on a set day every month until the borrowed money is paid back. Once paid back it would be released in the form of an RRSP. Check with your institution to make sure it is reported to your bureau. A secured credit card will accept an amount from you as a pre payment on your credit. The credit card company will take the full amount up front and this would be your limit. It may seem odd that you are borrowing your own money but think of it as an inexpensive way to build a credit history. When using a secured card keep in mind that you will never want to close this account as a maxed balance. This may be your money but the credit card company will want you to pay the full balance then request the refund cheque. I would not suggest closing this account anyway as it wold then become your credit builder and would help establish an average time on credit bureau. The next one is a joint credit card or “piggybacking“. I talked about this in another post, but this is when your go on another’s persons credit card, as a joint owner, and the credit reported will report to your bureau as well. The last one I mentioned was a                          car loan for new credit, or a no credit car loan. This car loan(without a co-applicant) might be at a higher rate to start with but you can always try to re finance at a later date. Of course this will initial car loan will cost money in interest but if done right, can really improve your score. It is not uncommon for no credit car loans to be at a higher rate. These are just some ways to get credit with no credit.

Just my 2 Cents

-M

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