Level up your credit score!

Do you know your credit score? Are you reviewing your credit card statements?

Maybe your answers are no, but don’t worry. We’re here to provide some financial advice that’s worth putting into practice. Having good credit is essential for most large financial transactions and having a low credit score can lead to financial woes.

To avoid facing these financial burdens, we interviewed one of Humber College’s finance professors to share simple ways to build good credit as a student and to highlight its importance.

Meet Brad Witt

Photo by Humber CFE

Brad is a full-time accounting professor in Humber’s Bachelor of Commerce degree program. In addition, he works as an advisor at Genecis Bioindustries.

Regarding his education, Witt has a Bachelor of Arts degree, and a Masters degree in Business Administration (Finance) and holds a CPA designation. With over 20 years of experience, Witt has worked in several financial roles at companies such as Dow Chemical Company and Husky Injection Moulding.

With so much knowledge and experience under his belt, we know his advice will be useful and we’re excited to have the opportunity to share it!

So, let’s learn about credit.

What is credit and why does it matter?

Someone is holding credit cards in their hands.
Photo by Avery Evans

According to Witt credit represents your financial reputation. It impacts financial transactions such as:

  • insurance
  • finding a rental
  • getting a car loan
  • seeking employment
  • mortgage
  • acquiring a phone plan

These types of financial transactions are important aspects of your life and having a low credit score can have negative impacts, like denial of a loan or paying higher interest rates. For example, if you’re seeking a car loan and your credit score is low, the interest rates will be extremely high and that’s if you get approved for the loan.

Likewise, if you’re searching for apartments, typically landlords complete a credit check. It’s all about assessing your risk and the ability to pay your bills on time and a low credit score is a warning sign to landlords.

What’s a simple way to build good credit?

According to Witt, it’s quite simple. Get a credit card and ensure you’re using it often to build your credit history.

However, there’s a catch. You must pay your bill on time and the exact amount spent. That way, you’re building your credit score over time.

Although, you can focus on the minimum payment; try to repay the exact amount. It’s essential to keep your balance under 30% of your available credit to avoid interest fees.

Do you think it’s a good idea to check your credit score constantly?

Yes, of course!

Witt mentions two types of checks to keep in mind. A hard check refers to a lender or company pulling your credit report as you’re applying for a car loan or mortgage. It’s crucial to note that hard checks impact your credit score.

Just the thought of seeking new credit suggests you’re risky to lenders. And ultimately, you might be unable to pay your bill.

Alternatively, soft checks are completely different. Insurance companies or landlords usually complete a soft check to assess your risk. But it doesn’t affect your credit score or appear on your credit report.

What are some credit reporting agencies to use?

Equifax and TransUnion are popular ones Witt suggested.

Equifax offers a breakdown of your payment history, loans and current balances. It’s easy and simple to use by registering for a free account and can help you to stay on track.

It’s a good idea to start building your credit early. However, if you’re an international student, it can be challenging to get a credit card. But, you can apply for one at banks like BMO. Currently, their NewStart program assists newcomers with receiving credit cards with ease.

However, only apply for credit cards that match your spending habits and your current income. It’s one way to avoid spending over your limit.

In the future, you might be interested in a mortgage or car loan and having a good credit score is essential in getting approved. Plus, you’ll get better deals with lower interest rates too. Going forward, build your credit history by paying your bill monthly and avoid maxing out your credit card.

*This interview was edited for clarity. Additional information was also included*

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