The Importance of Building Good Credit as a McGill Graduate

As a recent McGill graduate, you may be wondering about the importance of building good credit. While credit may not be top of mind as you navigate post-grad life, establishing good credit can have a significant impact on your financial future.

First, let’s define what good credit means. Good credit is a numerical score that represents your creditworthiness as a borrower. This score is based on factors such as your payment history, credit utilization rate, length of credit history, and types of credit accounts. A good credit score is generally considered to be above 700, with scores above 800 being excellent.

So, why is good credit important for a McGill graduate? Here are a few reasons:

1. It can lead to lower interest rates on loans and credit cards: If you have good credit, lenders will view you as a low-risk borrower and are more likely to offer you lower interest rates on loans and credit cards. This can save you thousands of dollars over the life of a loan.

2. It can make it easier to rent an apartment: Landlords often check credit scores before renting out an apartment. If you have good credit, you are more likely to be approved for an apartment and may even be offered lower rent.

3. It can increase your chances of getting a job: Some employers check credit scores as part of the hiring process, particularly for jobs that involve managing money or sensitive financial information. If you have good credit, it can demonstrate responsibility and make you a more attractive candidate.

Now that you understand why good credit is important, how can you build it as a McGill graduate?

1. Pay your bills on time: Late payments can have a significant negative impact on your credit score. Make sure to pay all of your bills on time, including credit card bills, student loans, and rent.

2. Keep your credit utilization rate low: Your credit utilization rate is the percentage of your available credit that you are using. For example, if you have a credit card with a $10,000 limit and a $2,000 balance, your credit utilization rate is 20%. It’s generally recommended to keep your credit utilization rate below 30%.

3. Monitor your credit score: You can obtain a free credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) once per year. Make sure to review your credit report regularly and dispute any errors that you find.

In conclusion, building good credit is important for a McGill graduate as it can lead to lower interest rates on loans and credit cards, make it easier to rent an apartment, and increase your chances of getting a job. By paying your bills on time, keeping your credit utilization rate low, and monitoring your credit score, you can establish and maintain good credit.