Get yourself some credit

Learn how to establish a good credit history.



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A young friend of mine who shall remain nameless has been complaining to me of his inability to get a credit card. He doesn’t understand why, after holding down a good job for six years, diligently paying rent and meeting his other commitments, he still can’t convince his bank to give him a credit card. To make matters worse, his sister, who is still in university, was issued a card despite the fact that she doesn’t have a job. What gives?

This young lad is a perfect example of a young professional who, in the past, hadn’t bothered to establish his own credit identity.

Everyone needs to have the ability to borrow money. That’s true whether you’re a young adult starting out or you’ve just found yourself in the new role of single parent.

One of the easiest ways to establish your credit reputation is with the help of a co-signer. You’ll be trading on their credit reputation and their guarantee to squeeze your way into the world of credit. Make sure that you have that person’s name removed from the loan as soon as you’ve established your ability to repay so that you’re seen to be standing on your own two feet.

Another relatively simple tactic is to apply for an RRSP loan. Most RRSP providers will be happy to lend you the money you’ll then place inside an RRSP with them without much of a credit investigation. Make your regular monthly payments on-time and voilà: you’ve got a credit history. Just make sure you only borrow as much as you can repay within six months. Then switch those “loan repayments” to regular RRSP contributions.

A secured credit card is another way to get a credit record. The card is “secured” because you put up the cash to cover your balance. Lenders often want twice the credit card limit, so if you want a $500 credit limit, you’ll have to ante up $1,000. Once you’ve established your ability to manage the card—anywhere from six months to a year—you can ask for the security requirement to be dropped and your deposit returned.

Whatever route you take to build your credit reputation, remember that if you use your credit unwisely, it’ll cost you big-time. Repeat after me: Credit is good; debt is bad! Now you’ve got it.

5 comments on “Get yourself some credit

  1. It confuses me why you are encouraging people to get credit cards and loans. Why promote getting into debt? I applaud the friend who has a good job and hasn't been using a credit card. Why ruin that? The only reason to establish credit is to be able to borrow money. If you don't have the money for something and feel you need to borrow to get it, It means you can't afford it.


  2. Nancy, debt isn't always a bad thing, there is such a thing as good debt. These would include things such as a mortgage, student loan or RRSP Loan(although making regular RRSP contributions is preferable.) My philosophy is to establish your credit when you are young and in school. Credit Card companies often throw credit at University Students, however the limit if often small and it's much better to "learn a hard lesson" when you only have a $500 or $1000 credit card then when you are a young working adult with a limit in excess of $5000.


  3. Gail's advice is on the money folks – only thing I don't understand is why his bank is not giving him a credit card – not consistent with my experiences. Perhaps there are skeletons in his credit closet? If not, he should open a new account with another bank and he will likely be given a $1,000 credit card almost immediately.


  4. @John, I do respect where you are coming from but I don't agree that there is ever anything that could be called good debt. The only thing that seems unavoidable is a mortgage because the prices of houses has just gone out of control. Unfortunately people are taking them out over 30 and 40 years which means they are getting more house than they can afford. And unfortunately, those credit cards you say the students are getting are not $500 or $1000 cards. I was offered a $5000 credit card while in college and thankfully had the good sense to turn it down.


    • A mortgage is considered "good" debt because it doesn't follow the same path as standard loans. A mortgage allows you to build equity, while giving you a place to live at the same time. If you put in $10,000 worth of principal on you mortgage (in fact more, if you've invested in a good property), you have $10,000 worth of home. If you have payed $10,000 worth of rent, you have $0 worth of home. And in most cases, the actual cost of renting and mortgage spread over a few years works out to be the same.


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