Credit: a useful tool

Credit is a handy payment tool, but it must be used wisely. Opportunities to get into debt are many, becoming more and more available and often very appealing. Remember, however, that credit isn't free, since interest increases the cost of your purchases. By credit, I mean both credit card Credit card: Plastic card issued by a credit company (e.g., VISA) that you can use to make purchases on credit and pay for them at a later date. s and loan Loan: Amount of money lent for a predetermined period of time. s from financial institutions.

Before you meet with an advisor to get a loan
First you'll need to analyze your needs and determine the exact amount you need to borrow. Then you'll need to obtain proof of employment, draw up a budget Budget: Complete list of all the estimated spending and income of a business or an individual.   and make a list of references. Only then will you be ready to make an appointment with an advisor. Be honest and make sure you're on time.

The advisor will determine your repayment capacity, your prior credit history and your sense of responsibility to determine if you're eligible for credit.

Bad habits that hurt your credit rating Credit rating: Record of your financial reputation, in particular your ability to repay loans, published by a credit bureau. Financial institutions use your credit rating to assess the risk of lending you money.

• writing bad cheques against your chequing account
• depositing empty envelopes at the ATM
• making late payments
• losing control by borrowing from several financial institutions and accumulating too much personal debt

Something that may look harmless today could ruin your financial reputation later. A few cases of wrongdoing could later on translate into higher interest rate Interest rate: Amount charged or paid for the use of money, expressed as a percentage. Investors receive interest for letting others use their money and borrowers pay interest to borrow money. s, the need to have an endorser or even a "no" for an answer. Don't forget that your credit reputation starts the first time you're granted credit. Be very careful, as your credit rating follows you for the rest of your life.

Good news! VISA Desjardins FOR STUDENTS ONLY cardholders generally show good judgement when using their cards. They not only benefit from all the advantages of having a card while planning trips and to cover unexpected expenses, but they also establish a good credit rating in the process.

This column was written by Mélanie Lefebvre, Youth Focus Advisor at the Caisse populaire Desjardins de Mont-Tremblant.