Banks, Taxes and Credit score in Canada

Sat today with a Bank consultant, who explained to me the in’s and out’s of banking, taxes and all the financial advice you can think of, first things first, build a credit history, get a credit card and pay it off every month on time.

Second thing is get a job, easier said than done, first off in Montreal you need french, most employers want you to be able to speak and deal with different people, which most of the time are people who speak french, but it is possible, if you don’t speak french, the province of Quebec can give you free french lessons, just apply and everything will be good. Once you have a job and a steady income, you rating will increase.

Thirdly, pay off your bills using the credit card or bank directly, this establishes a good point of information collection, the bank is your best bet for establishing the credit history, and always pay off your credit card bills when they reach 30% of the limit.

Fourth, don’t ever over spend, no matter the temptation, be smart and thrifty. My guess is if you have the option of credit cards, don’t use too many over your limit. You will spend more and more until you start over spending, and this is a big no no.

Now, you have a bank account and a credit card, open a Tax free Saving account (TFSA), the government of Canada established the initiative of savings, so through your Bank you can open a TFSA  where every year you can add to it $5,000 starting retroactively from 2008, so in 2011 you can save $15,000 tax free. The idea is that any income from a normal savings account is counted towards your taxable income.

Oh, did I mention that your taxable income can go up to 48% depending on your income if you make over $100 grand a year.

My best recommendation is; know your options, talk to your bank first, or tax lawyer.