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Credit is already part of everyone lives. There are different types of credit such as credit cards, loans, and credit scores and we always hear about them. But did it ever slipped in your mind about how it actually affects the economy? Consumer credit isn’t just about borrowing money; it’s a powerful tool that helps people make big purchases, manage their finances, and even drive economic growth.

In this Padlet, you’ll find insights on how credit impacts both individuals and the broader Canadian economy. We’ll explore how it influences spending habits, business growth, and financial stability, along with some key resources to help you better understand credit in Canada. Whether you're looking to improve your own financial literacy or just curious about how it all works, this space is here to help!

Take a look around, and let’s dive into the world of consumer credit together!

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Video #1 "Understanding Consumer Credit"

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Video #1 "Understanding Consumer Credit"

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This video gives a simple and easy-to-understand overview of consumer credit in Canada. It explains what credit is, how it works, and why it’s such a big part of daily life. That is, from using a credit card for small purchases to taking out loans for bigger expenses such as purchasing a home. The video also touches on how credit affects individuals, helping them build financial stability (or, if mismanaged, leading to debt issues). On a bigger scale, it shows how consumer spending through credit helps businesses grow and keeps the economy moving.

I picked this video because it breaks down consumer credit in a way that’s clear and relatable. It shows not just the basics, but also on why credit matters in everyday life and in the economy as a whole. With more and more people relying on credit, it’s important to understand both its benefits and risks. This video is a great starting point for anyone who wants to be smarter about managing credit and making informed financial decisions.

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Transcript

Narrator: Understanding Credit. Using credit when needed can be a helpful tool if you don't let it get out of control. It's important to pay your bills in full and on time to build a good credit history.

Twitter conversation (on screen):

Sarah: It's my lucky day! Just got pre-approved for a new credit card!

Vince: @Sarah Do you really need another credit card?

Sarah: @Vince Aren't credit cards like shoes? You can never have enough?? ;-) Ellen Roseman: Personal finance journalist, instructor, and author

Narrator: The option to buy on credit or borrow money can be helpful, but it can also lead to financial problems. Today we will talk about how to practice good credit management.

First, we will review different types of credit products available to most Canadians. Then we will talk about credit reports and credit scores, as well as credit reporting agencies.

We'll take a short quiz to test your credit card knowledge, then discuss some tips to avoid problems with credit cards.

Finally, we will present some interactive tools to help you select a credit card and better understand your credit card payment options.
Types of CREDIT
Narrator: There are several types of credit products.

The best known is probably the credit card. But there are also student loans, car loans, personal loans, lines of credit, and mortgages.

When you use credit products, credit reporting agencies track how you use them and create a credit report. Credit reporting agencies are private companies that sell credit reports to their members, which include banks, credit card companies, and other financial institutions. Most Canadians have a credit report on file with a credit reporting agency.

Twitter conversation (on screen):

Vince: @Sarah I wonder if having a lot of credit cards affects your credit score?

Sarah: @Vince Um, what's a credit score?

Vince: @Sarah If you're using credit you should know about credit reports and credit scores!

Vince: @FCACan Can you help us understand credit reports and credit scores?

Credit report and CREDIT SCORE*
Narrator: A credit report is a summary of your credit history. Building a good credit history is important to your financial health. Your credit report is created when you borrow money or apply for credit for the first time.

The credit report includes personal information as well as dates of account openings and loan applications, Credit balance, Payment history how much money you owe, your payment history, and any debts sent to collection agencies. When you apply for credit, the lender reviews your credit report as part of the process before approving your application.

The lender wants to minimize risk and make sure you have a record of being a good borrower. That means you make regular payments and pay debts back in full.

Did you know that late payments and other information such as personal bankruptcy will stay on your credit report for several years? The length of time this information remains on your credit report varies by credit reporting agency and sometimes by province. See the Financial Consumer Agency of Canada's publication titled "Understanding your Credit Report and Credit Score" for more information.

A credit score is a three-digit number based on information in your credit report along with other factors. Each credit reporting agency uses its own formula to calculate credit scores. Lenders can also calculate your credit score based on their own formulas.

In Canada, credit scores range from 300 to 900 points. The best score is 900 points. How is your credit score calculated? In general, you get points for actions that show lenders you can use credit responsibly.

You lose points for things that show you have difficulty managing credit. The actual formulas used are not available to the public. However, the main factors that are used to calculate someone's credit score include payment history, use of available credit, length of credit history, number of inquiries for your credit report, and having a mix of credit products. In Canada, there are two major credit reporting agencies: TransUnion and Equifax.

Both companies provide you with a free copy of your credit report whenever you ask for one. This report does not include your credit score, which is a paid service. It is important to review your credit report regularly to check for errors or fraud. A simple mistake on your credit report can cause you problems when you apply for credit.

To get your credit report free of charge, you may order it by mail, fax, telephone, or in person, and you must receive it by mail or in person. There is usually a fee for accessing your credit report online.

Knowing what is in your credit report is important. If you have a poor credit history, it could be harder for you to get a credit card or a loan.

You could have to pay more to borrow money. It could even affect your ability to rent housing or get hired for a job. So review your credit history annually and work out ways to improve your credit score.

Twitter conversation (on screen):

Sarah: @Vince Wow, I just reviewed my credit report and they catch everything!

Vince: @Sarah Borrowing money is not a game... or you would definitely be the winner!!

Sarah: @Vince So the free credit card is not so free after all?? Vince: @Sarah Is anything in life really free???

How well do you understand CREDIT?*
Narrator: Now, let's do a small quiz to test your knowledge about credit cards.

True or false: Paying your credit card balance two or three days after the due date has no effect on your credit score.

That's false. Regardless of how soon after the due date you pay, a late payment could be recorded on your credit file and stay on your record for several years. Not to mention what you'll pay in interest fees!

True or false: All credit cards have the same grace period, or interest-free period, in which you can pay your balance in full without penalty.

That's false. Each financial institution sets its own grace period. Federally regulated financial institutions require a grace period of at least 21 days. However, a lender could choose to have a longer grace period.

True or false: For a cash advance, you pay interest from the day you take the advance until the date on which you repay it in full.

That's true. Interest starts adding up on cash advances right away, unlike a credit card purchase, where you are charged interest only after the grace period has passed, unless you are carrying a balance from month to month. I hope you guessed all the answers right! Before you accept any form of credit, make sure you read the terms of the agreement and understand your rights and responsibilities.

You can learn more by visiting the Financial Consumer Agency of Canada's website.
ItPaysToKnow.gc.ca
Twitter conversation (on screen):

Sarah: @Vince Don't be a downer!! This could be my ticket to financial freedom!

Vince: @Sarah Ya, if you call 18% interest financial freedom!!!! Read the fine print...
How to avoid problems with CREDIT CARDS*
Narrator: Credit cards can be a convenient way to pay, but remember, when you pay for something with a credit card, it is the same as taking out a loan, and you have to pay it back. To avoid problems with credit cards, here are some tips:

Pay the balance in full every month to minimize interest charges. If you cannot pay the balance in full, don't make just the minimum payment; pay as much as you can to minimize the interest charges.

It is your responsibility to pay your balance a few days before the due date to ensure your payment is credited on time. If you typically carry a balance, look for a credit card with a low interest rate. Every financial institution offers one, sometimes with a small annual fee.

Finally, if you can arrange to do so, transfer your credit card balance to a line of credit with a lower interest rate. This option only works if you have the discipline to pay off the line of credit and not take on new credit card debt. Avoid temptation - leave your credit cards at home until your debt is paid off.

Twitter conversation (on screen):

Sarah: @Vince Yikes!! You're right - hate to say it ;) It's expensive to own a credit card...

Vince: @Sarah Well, not if you use it right. How do you think I paid for dinner last week? ;)

Sarah: @Vince Let me guess... you've already paid your balance off?

Vince: @Sarah On time, and in full! Lenders love me. I'm low risk. And yet, still a fun guy!!
Interactive TOOLS*
Narrator: You can find a lot of information about credit reports and types of credit products, as well as interactive tools, at the Financial Consumer Agency of Canada's website. The Credit Card Selector lets you compare different credit cards according to your buying habits and needs. The Credit Card Payment Calculator lets you see what happens if you make a minimum payment on your credit card balance, compared to paying more.
ItPaysToKnow.gc.ca
Narrator: Let's try out the Credit Card Payment Calculator.

Step 1: Enter your information into the Credit Card Payment Calculator.

For this example, we will use the default information that's already in the calculator. The credit card balance is $1,000, annual interest rate is 18%.

Option A: What if you only make the minimum payment each month? The minimum monthly payment is usually $10 or 3% of your balance, whichever is higher. In this case it is 3% of $1,000, or $30.

Option B: What if you make the minimum monthly payment plus an extra amount? Let's say you can pay an extra $5 a month, for a total monthly payment of $35.

And finally, Option C: What if you pay a fixed monthly payment of $100?

Step 2: Click on the Calculate button.

Step 3: Review your results

As you can see under Option A, if you only make the minimum monthly payment, it would take you 10 years to pay off $1,000, and you would pay almost $800 in interest.

Option B shows that by increasing your monthly payment by $5, you will pay off your credit card balance 3 years and 10 months sooner and save $286 in interest.

And finally, if you could pay $100 per month, as in Option C, you would pay off your debt in less than a year, and you would pay less than $100 in interest!

Now try it with your own credit card information. Your balance, annual interest rate, and required minimum monthly payment are all on your monthly statement.

What did we LEARN?
Narrator: To conclude, let us summarize what we have learned today. We began by looking at different types of credit products. Then we talked about credit reports and credit scores and the importance of having a good credit history.

We discussed credit reporting agencies and how to get a free copy of your credit report and review it regularly.

Through a short quiz, we tested our knowledge about credit card rights and responsibilities.

Then we reviewed some tips on how to avoid problems when using credit cards.

Finally, we looked at some interactive tools to help us choose a credit card and manage our payment options. All this knowledge can help us use credit responsibly.

I wish you financial success.

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educational materials; personal finance; lifestyle; money management; credit; credit cards

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Transcript Narrator: Understanding Credit. Using credit when needed can be a helpful tool if you don't let it get out of control. It's important to pay your bills in full and on time to build a good credit history. Twitter conversation (on screen): Sarah: It's my lucky day!

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Video #2 "What does 2025 hold in store for Canada’s economy?"

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Video #2 "What does 2025 hold in store for Canada’s economy?"

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This video takes a close look at Canada’s growing household debt problem and how borrowing affects both individuals and the economy. It gives us inputs on why so many Canadians are engaging and taking on more debt. Whether it’s due to low interest rates, rising housing costs, or the need to cover their daily expenses. It also explores the risks of relying too much on credit, showing how it can lead to financial struggles for families and even create bigger challenges for the economy as a whole.

I selected this video as it provides a perspective on how consumer credit affects both individuals and the broader Canadian economy. It speaks about the growing reliance on credit, the risks of rising household debt, and the economic impact of borrowing habits. This makes it a valuable resource for understanding both the pros and cons of consumer credit. By including this video, I aim to give viewers a deeper insight into the long-term effects of credit use and financial decision-making in Canada.

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What does 2025 hold in store for Canada’s economy?

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Video #3 "The Impact of Rising Consumer Debt Explained

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Video #3 "The Impact of Rising Consumer Debt Explained

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This video give us an information on why consumer credit is crucial for both personal finances and the economy as a whole. It explains that credit helps people make big purchases which drives demand and boosts businesses. It also talks about how credit can act as a safety option, giving people the ability to spend even during tough financial times. On top of that, it highlights how easy access to credit can impact consumer confidence, which ultimately affects economic growth and stability.

This video is important because it helps us understand just how much consumer credit fuels the economy. It shows how borrowing enables people to buy what they need, which supports businesses and keeps the economy moving. By connecting consumer credit to broader economic trends, this video demonstrates just how essential credit is to both individual financial decisions and the overall health of the economy.

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The Impact of Rising Consumer Debt Explained

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Video #4 The latest Canadian consumer credit trends

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Video #4 The latest Canadian consumer credit trends

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This video breaks down how consumer credit directly impacts the Canadian housing market, shaping everything from home prices to overall economic stability. It explains how access to credit makes it easier for people to buy homes, which increases demand and drives up prices. But it also highlights the risks of too much credit in the market, showing how easy borrowing can sometimes lead to housing bubbles, where prices rise too fast and become unsustainable. By looking at past trends and economic patterns, the video gives a clear picture of how credit and real estate are deeply connected.

I picked this video because it does a great job of explaining how the housing market reacts to changes in consumer credit. It not only shows how credit helps people buy homes and boosts the economy but also warns about the risks of prices getting out of control. The discussion on housing bubbles is especially important, as it gives a reality check on the dangers of excessive borrowing. This video is a valuable resource for understanding both the benefits and potential risks of credit in the real estate market.

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The latest Canadian consumer credit trends

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Website #1 Bank of Canada Monetary Policy

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Website #1 Bank of Canada Monetary Policy

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The Bank of Canada's Monetary Policy Report takes a deep dive into the state of the Canadian economy, breaking down key factors like economic growth, inflation trends, and the central bank’s responses to current challenges. It highlights important developments such as consumer spending habits, business investments, and global influences that shape the country’s financial landscape. The report also explains how the Bank of Canada plans to manage inflation and promote stable, long-term economic growth through its monetary policies. By providing data-driven insights, it helps paint a clear picture of where the economy is headed and what steps are being taken to maintain stability.

I chose this report because it provides an in-depth and reliable look at Canada’s monetary policy and overall economic outlook. What makes it particularly relevant to this topic is its discussion on consumer credit conditions and how they impact the Bank of Canada’s decisions. Understanding this connection helps explain how credit availability, interest rates, and borrowing behavior influence the economy, making this report an essential resource for exploring the role of consumer credit in economic policy.

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Economic growth has ticked up in Canada, boosted by past cuts in interest rates. In the absence of new tariffs, growth is forecast to strengthen, and inflation remains close to 2%. But the threat of new tariffs is causing major uncertainty.

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Website #2 Debt service indicators of households

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Website #2 Debt service indicators of households

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This webpage provides a detailed look at household debt in Canada, offering key statistics such as the debt-to-income ratio, debt service ratio, and a breakdown of different types of debt, including consumer credit and mortgages. The data helps illustrate how much debt Canadian households are carrying, how their financial obligations have changed over time, and what these trends mean for economic stability. By tracking these metrics, the webpage offers valuable insights into how borrowing habits, interest rates, and economic conditions influence consumer behavior. This information is crucial for understanding both individual financial health and the overall stability of the Canadian economy.

I chose this source because it provides reliable, up-to-date data on household debt, which is essential for understanding the role of consumer credit in Canada’s economy. The detailed breakdown of different debt types allows for a deeper analysis of borrowing patterns and how they impact economic policy and financial stability. This resource is particularly useful because it goes beyond general statistics, helping to explain how consumer credit affects spending behavior, financial well-being, and long-term economic trends.

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Debt service indicators of households, national balance sheet accounts

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Debt service ratios, interest and obligated principal payments on debt, and related statistics for households, Canada.

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This page explains the importance of credit scores in Canada and how they affect your ability to get loans, credit cards, and even rent a home. It breaks down the factors that influence your score, like payment history, the amount of debt you owe, and how often you apply for credit. For newcomers, the article suggests starting by getting a credit card and using it responsibly, paying bills on time, and even setting up phone or internet plans to build a good credit history. It also advises regularly checking your credit report to ensure everything is accurate and up-to-date. Understanding and managing your credit score is key to achieving financial stability and accessing the services you need in Canada.

I selected this page because it provides essential information for newcomers to Canada about understanding and managing credit scores, which is directly linked to the importance of consumer credit in the economy. The page explains how credit scores influence access to financial products like loans and mortgages, which in turn impacts consumer spending and business growth. By including this resource, you’re highlighting how individual credit behavior contributes to broader economic trends, such as economic stability, consumer confidence, and access to credit. This helps deepen the understanding of how consumer credit directly affects both personal financial decisions and the overall economy.

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As a newcomer to Canada, you might want to understand the importance of a good credit score in your financial journey.

What is a credit score? It is a total score on a scale of 300 - 900 rating how you manage credit. It is based on your credit history, which is summarized in your credit report. Canadian lenders may use it to assess the potential risk of lending to you.

Here in Canada, financial institutions and some businesses typically review credit scores to assess your eligibility for credit, loans, or other financial services. These are a few common examples of where your credit score may be reviewed:

When making property rental applications to ensure you qualify as a tenant based on landlords' requirements

When applying for credit cards

When getting approved for a mortgage to finance a home

Learn more about TD New to Canada Banking Package
How is my credit score calculated?

So what makes up your credit score? Your score is based on information from your credit report. Points may be added for responsible credit use and deducted for missed payments or poor financial management. Scoring models may consider factors like your payment history, amounts owed, and the frequency of your missed payments.

While the exact formulas for calculating credit scores aren't shared, they are influenced by several factors, such as:

Length of your credit history

Your payment history and missed payments

Any outstanding debts and credit card balances

How close you are to your credit limits

Recent credit applications and the types of credit you use

Any accounts sent to collections or records of bankruptcy

Your credit score changes over time as your credit report is updated. Keep in mind that your credit score from your country of origin or any other country where you may have lived will generally not be used in Canada.

How your credit history is checked

When you apply for credit in Canada, financial institutions may:

Look at your past transactions with them

Review the details you provide in your application

Request a credit report from a credit agency

Credit agencies in Canada may collect information about your credit use from lenders. With this, they create a credit report that summarizes your financial history.

It's a good idea to check your credit report regularly to ensure the information is accurate and up-to-date. This may help you stay on top of your credit history and address any errors you may perceive.
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What number is considered a good credit score?

In Canada, credit scores typically range from 300 to 900. Below is a handy reference to evaluate your rating.

A score:

Between 660 and 724 is considered good

Between 725 and 759 is seen as very good

760 or higher is generally viewed as excellent

Again, lenders may use your credit score to evaluate your ability to manage credit. A higher score may make it easier for you to access loans, credit, or even rental properties and certain jobs. Keep in mind that your score changes over time based on your credit use and payment history.

Tips for building a good credit score

If you're new to Canada, here are some simple ways to start building your credit:

1. Apply for a credit card
Using a credit card responsibly is a great way to build credit. When you do make purchases, always try to pay your bill on time. Starting early may help you establish a credit history. If you haven't applied yet, it's nice to know TD offers a credit card for newcomers as part of itsTD New to Canada Banking Package.

2. Get a phone or Internet plan
Timely phone and Internet bill payments help contribute to a good credit score. It may be a good idea to check with your provider to see if they report payments to credit agencies.

3. Make loan payments on time
Whether it's a car lease, student loan, or mortgage, making these payments on time may also contribute to a positive credit history and good score.

4. Stick to a budget
Budgeting helps to remind you to pay your bills on time, which may help you build and maintain good credit. Remember, if you need assistance with budgeting, TD offers tools like theTD App or online banking through EasyWeb to help you manage your money from anywhere.

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Why Choose TD?

150 years helping Canadians:

TD has a proud history of delivering financial solutions to Canadians for more than 150 years. TD also brings a century of experience helping newcomers navigate the unique challenges of the Canadian banking system.

With over a thousand branches, a reputation for excellence in financial services, and the ability to also serve you in more than 80 different languages, TD has become one of the largest and most trusted banks in Canada, now serving 16 million Canadians.

TD offers online support and resources of interest to newcomers on topics such as banking basics, moving to Canada, credit score essentials, and more. TD is open longer hours for your convenience and has thousands of ATMs across Canada to help you take care of your everyday banking needs quickly and easily.

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Learn more about TD New to Canada Banking Package today. Book an appointment to talk with a TD Personal Banking Associate about the TD New to Canada Banking Package. You can book online right away, or visit the TD website to learn more.
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[1] Financial Consumer Agency of Canada, Credit Report and Score Basics, Canada.ca, Ottawa, Government of Canada, 2024, n.p., https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/credit-report-score-basics.html, (accessed 12 December 2024)

[2] Financial Consumer Agency of Canada, Credit Report and Score Basics, Canada.ca, Ottawa, Government of Canada, 2024, n.p., https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/credit-report-score-basics.html, (accessed 12 December 2024)

[3] TD Bank, 'What's A Good Credit Score?', , Canada, TD Bank, 2024, What is a good credit score? | TD Canada Trust (Accessed 11 Dec. 2024)

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Understanding Credit Scores: A Guide for Newcomers to Canada | CIC News

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As a newcomer to Canada, you might want to understand the importance of a good credit score in your financial journey. What is a credit score? It is a total score on a scale of 300 - 900 rating how you manage credit. It is based on your credit history, which is summarized in your credit report.

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Website #4 Housing Market Information Portal

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Website #4 Housing Market Information Portal

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The Canada Mortgage and Housing Corporation's (CMHC) Housing Market Information Portal offers free, easy-to-use access to the latest housing market data for Canada. Users can explore comprehensive information on housing starts, under-construction projects, and completions across various urban centers. The portal provides tools to analyze housing trends, compare data across regions, and access detailed reports, aiding stakeholders in making informed decisions related to housing and real estate.

I selected this portal because it serves as an authoritative source of up-to-date housing market information in Canada, directly from the national housing agency. A unique feature of this portal is its interactive tools that allow users to customize data views, facilitating tailored analyses of housing trends and market conditions across different regions and timeframes.

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The housing data you want, the way you want it.

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Image #1 Household Debt-to-Income Ratio in Canada

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Image #1 Household Debt-to-Income Ratio in Canada

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This graph illustrates the trend of Canada's household debt-to-income ratio, depicting the total household debt as a percentage of disposable income over recent years. It highlights periods of significant debt accumulation, reflecting changes in borrowing behavior and economic conditions.

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Image #2 Canadian Consumer Credit Trends

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Image #2 Canadian Consumer Credit Trends

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The image gives a snapshot of how Canadian families manage their money, showing that most of their income goes toward housing, transportation, and food—the essentials of daily life. It also reveals interesting regional differences, like how Nunavut spends the most on food and clothing, while Saskatchewan puts the most into transportation. Based on data from Statistics Canada (2009) and shared by Mint.com, this breakdown helps us understand how people across the country prioritize their spending to meet their needs.

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I was really surprised by how much consumer credit affects not just individual people but the entire economy. Almost everyone in Canada uses credit in some way, and it plays a huge role in how much people spend, save, and even how businesses grow. I also didn’t realize how quickly household debt is rising, which made me think about how important it is to be smart with money and not rely too much on borrowed funds.

This topic really hits home for me because I know I’ll have to manage credit in the future—whether it’s for a car, school, or just everyday expenses. I’ve seen how credit can be super helpful when used the right way, but I’ve also seen people struggle with debt when they’re not careful. Learning about this now makes me feel more prepared to make good financial decisions later in life.

If I could give one piece of advice, it would be that credit can be a great tool, but only if you use it wisely. It’s easy to swipe a credit card and forget about it, but that money isn’t free—it comes with interest, and bad credit can follow you for years. I’d tell my friends and family, “Use credit to build your future, not to fund a lifestyle you can’t afford.”