Since 2005, Windmill Microlending has been supporting newcomers to Canada. We offer low interest microloans to pay for the licensing or training immigrants and refugees need to continue their careers. Having worked with over 4,000 newcomers as they re-establish their careers, we have seen clients make the same financial mistakes repeatedly. Here are three tips to avoid making common mistakes when managing your finances in Canada.
#1: Understand the importance of a positive credit history
Credit rating agencies in Canada keep a record of how you use credit, including credit cards, line of credit and loans. They also know if you pay your bills on time or not. A poor credit score means you will pay higher interest if you need to borrow for a house or car, and it may keep you from the apartment or job you seek.
To keep your credit score high, pay your bills on time, every time. Don’t over-spend to the point where you cannot make your payments. Many newcomers have been burned by missing mobile phone payments, especially if they come from a country where pay-as-you-go phones are the norm.
#2: Manage your credit cards well
Handled well, your first Canadian credit card can help to establish a positive credit history. It can also be useful in emergencies. Handled poorly, credit cards can create financial trouble and lower your credit score, as we mention above.
Offers for credit card deals can be tempting, but some come with high interest rates. Be cautious. If you can’t pay off the balance you owe each month, make sure to make at least the minimum payment, and on time.
#3: Don’t fall into the payday loan trap
It’s expensive to settle in a new country, and savings often run out more quickly than anticipated. Payday loans may seem like a solution during a stressful, tight period, but they can often create much more anxiety in the long run.
Interest charges by payday lenders are extremely high. The costs of the loan can escalate out of control, and you could find yourself in a vicious cycle of taking out payday loan after loan. Consider all other options before choosing this route.
If the high cost of education, training and licensing is keeping you from restarting your career, a microloan can be an excellent tool to help you overcome that barrier. Take a look at our two-minute Eligibility Quiz to find out if a loan from Windmill could be right for you.
Originally published by Newcomers Canada‘s reRoute monthly newsletter.