Is it time to get a credit card?

Considering your first credit card? Whether you've recently arrived in Canada or you’re embracing financial independence, getting your first credit card is an exciting milestone.

Thinking about getting a credit card?

A credit card can help you begin building your credit history, unlock perks and rewards, and add convenience and security to your transactions.

But, before you take those first steps in applying, it’s important to fully understand how credit cards work, what factors might impact your eligibility, and the necessary documentation you need to have on hand.

Now that you're familiar with some of the benefits, let's explore how you can qualify for one.

How to qualify for a credit card as a first-time cardholder or newcomer to Canada

To qualify for a credit card, you need to meet specific requirements established by the card issuer. These requirements may differ depending on the type of card you’re applying for or if you have established credit history in Canada.

Let’s take a look at some common criteria you’ll need to meet.

Qualifying as a first-time cardholder

If you're about to apply for your very first credit card, here are the essential criteria that are reviewed.

• Age of majority: You must be of legal age, which is defined as either 18 or 19 years old, depending on the province or territory where you reside.

• Citizenship or Residency: You must be a Canadian citizen or resident. The criteria for temporary workers or newcomers to Canada differ as we outline in the next section.

• Credit History: Any significant credit events, like a bankruptcy in the past seven years, could impact your eligibility.

• Credit Score: Issuers will consider your credit score when reviewing your application. If you’re a student and don’t have any established credit, you might want to explore student credit cards, which are designed with that in mind.

• Income Requirements (card dependent): Some credit cards require that you meet a minimum income threshold. It's important to check this beforehand to ensure you qualify for the specific card.

Qualifying as a newcomer to Canada

If you’re a newcomer and have been residing in Canada for less than five years, the application criteria might look a bit different.

At BMO, we offer unsecured credit card options for newcomers,  with a limit of up to $5,000 with no credit history. However, if you don’t qualify for an unsecured card, there are secured credit card options, which are also a viable starting point to build your credit in Canada.

What documentation & information should I have ready to apply for a credit card?

No matter your preferred method of applying for a credit card, remember to collect the following information beforehand, as you will be required to share it during the application process:

Your full legal name

Provide your full legal name exactly as it appears on your government-issued identification, such as your driver's license or passport.

Address

This should reflect your current, primary place of residence.

Current income details

When gathering information about your income, it’s important to note that this includes not just employment income but also funds from other sources. Let’s have a look at all sources that should be considered.

• Employed: If you’re employed, be prepared for the potential of having to verify your income with supporting documents, such as a recent pay stub or T4 slip after submitting your application. Typically, an underwriter will reach out by phone if they need further information.
• Self-employed: If you’re self-employed, you’ll typically be asked to provide documents that show a steady income for, at least, the last two years. This could take the form of a tax return, a profit-and-loss statement, or similar documents that demonstrates income. If you are self-employed, consider a business credit card which are specifically designed for business owners.
• Unemployed: If you’re unemployed or not earning an income (e.g., if you’re retired, a student etc.,), you can still apply, but it’s recommended you first speak with an advisor to help review your options.
• Other income: Income can also be in the form of gifts, scholarships, grants, investment income, social assistance or trusts.

Social Insurance Number (SINS I N)

While a SIN is no longer required on credit card applications, providing it may enable a quicker review. That’s because your SIN helps match your details with the credit bureau more accurately, ensuring a quicker confirmation of your identity.

Employer's contact details

Have your employer’s address and phone number ready, if applicable.

Now that you understand the essential documents needed, let's explore how you can further enhance your application for a higher chance of success.

Tips for improving your chances of a successful credit card application

The right preparation can make a difference in your credit card application outcome. If you want to ensure a smoother and quicker experience, keep these suggestions in mind.

1. Check your credit score

It may be surprising how a simple three-digit number can have such an impact. But that number – your credit score – reflects your ability to pay loans, bills, and other commitments on time. Canadian lenders use this number to assess your creditworthiness, which can play an important role in your credit card application.

Several factors can influence your credit score, including whether you pay your loans and bills on time, any existing balance on other credit cards or loans, and how close you are to your credit limit. Although there’s no universal minimum credit score requirement to qualify for a credit card, having a higher score indicates better creditworthiness and can improve your chances of approval. Of course, as mentioned above, there are other factors that play a role in determining your qualifications.

Knowing your credit score ahead of time can help you better understand your likelihood of approval. You can easily check your credit score online through Canada’s credit reporting agencies, Equifax or TransUnion. 

2. Research and determine your best credit card match

With many credit card options to choose from, each offering different features, rewards, fee structures, perks, and more, you might be wondering which card is the best for you. It’s important to do your research, but ultimately, the most suitable choice will depend on your lifestyle, spending habits, and preferences.

While considering your credit card options, it's equally important to pay close attention to specific card requirements. Ensuring that you meet those requirements before applying can help increase the likelihood of a successful application.