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The Benefits of Good Credit After College Graduation

7 min read

Published January 15, 2025

Table of contents

Key Takeaways

If your credit score is higher than 670, lenders consider you to have good credit.
Higher credit scores could mean lower interest rates on loans and credit cards.
Benefits of good credit extend to utility bills, home loans, job prospects, and more.

What will you do after college? Will you rent an apartment? Buy a house? Get a car loan?

Many of the things you dream of after graduation may benefit from you having good credit. You may be able to get lower interest rates and better terms on a car loan, new credit cards, or other financial products if you have good credit instead of no credit history or poor credit. Good credit could even affect your utility bills or phone plan.

Understanding the benefits of good credit in your post-college life may help you prioritize responsible use of credit while you’re still in school—and set you up for success.

What is good credit?

Before we talk about the benefits of good credit, let’s talk about what it means to have good credit. It starts with your credit report.

Your credit report shows credit card, loan, and other types of financial accounts you’ve had open. It may also include things like rent payments or utility services. This information is used to give you a credit score.

If your credit score is 670 or higher, lenders and credit card companies consider you to be a reliable borrower. This is what we call “good credit”.

Benefits of good credit after college

If you’ve had a student credit card, loans, or an apartment in college, you’ve had an opportunity to establish a history. And, if you have good credit, you may be able to get lots of benefits after you graduate.

(Are you graduating with a credit score that’s lower than you’d like? Or no credit history? We’ll discuss what you can do below.)

Seamless apartment hunting

Landlords often use your credit history to evaluate if you’re likely to pay your rent on time or if you might miss payments. If you have a record of missing payments, you may need to pay a larger deposit. If your credit report has lots of negative information on it, the landlord might not think you’ll be a reliable renter. And that means they may not approve your application at all.

Check your credit report before filling out a rental application and correct any errors. You can get one free credit report from each of the three major credit bureaus every 12 months.

Utility services without the extra costs

Your cell phone provider and utility companies may check your credit when you open an account. Good credit may show them that you’re likely to make payments on time. And that could mean smaller or waived deposits, saving you money. You might also be able to get a better financing deal on a new phone.

Simplify car purchases

Good credit may get you better financing options for auto loans. Lenders consider someone with a good credit score less risky to lend to—if your credit score is high, you probably have a history of making on-time payments. A low credit score might indicate that you’re less likely to repay your debts, so lower scores may lead to higher interest rates.

Better terms on loans and credit cards

Lenders and credit card issuers will check your credit history and credit score when you apply for a loan or credit card. Having good credit may make lenders more likely to approve your application. If you have a low score, the lender may see you as more likely to make late payments or default on your loan. That makes them less likely to approve your application.

Your credit score also helps determine the interest rate on your loan or credit card. If you have good credit, issuers may trust you to make on-time payments. That may make them more likely to give you a lower interest rate. And a strong credit score may get you higher credit limits on your cards.

Did you know?

Discover^® student credit cards let you earn cash back rewards while you're in college and can help you build your credit history with responsible use.¹

Learn More

Lower interest rates can make a big difference in how much you’ll pay over the life of a loan. And lower credit card interest rates could save you money if you can’t pay off your credit card balance in full every month.

Having a good credit score may aid in getting a higher credit limit or loan amount. It can also help you qualify for rewards credit cards.

Streamline the home-buying process

Having good credit is important for qualifying for a home loan (also called a mortgage) with competitive rates and terms. You may not need one right now, but this is good to know for the future. It may be best to build or rebuild your credit early so you don’t need to worry about a low credit score when you apply for a mortgage later.

Good credit may help you get a lower interest rate on your mortgage. If you have good credit, you might find you are approved for more than you can afford to pay each month, so keep that in mind as you budget your new mortgage. (Don't forget to factor in other bills, like your student loan payments, to your monthly budget when looking for the best home loan.)

There are many other factors that go into your home loan approval, including the amount of debt you currently have, the size of the down payment you’re able to make, and your current income. But good credit may help you get the loan amount and terms that you want.

Reassure potential employers

Some employers check your credit report to see if you’re financially trustworthy. This may be more likely if you’re looking for work in the financial sector or a role with financial responsibility.

In this case, good credit could mean the difference between getting a job offer or not.

What if a credit bureau tells me I have bad credit?

If you have a low credit score, you may have been told that you have a “bad credit score” or “poor credit.”

You can still earn a higher credit score if you have negative information on your report. It just takes some time. Here are a few things you can do that may improve your credit:

Pay off any credit card debt
Make your payments on time to establish a solid payment history
Keep your credit utilization (the amount of credit you use compared to your available credit) low
Contact a credit counseling agency if you need help
Talk to your credit card company about debt relief

Even if you have a low credit score, you could get a credit card to build better credit (with responsible use). There are credit cards for people with low credit scores that may help you rebuild your credit. There are also cards for students with no credit history.

The bottom line

The benefits of good credit go beyond getting approved for a credit card. A healthy credit score and a history of on-time payments may help you get an apartment, save money on utility bills, qualify for a car loan, unlock lower interest rates on credit cards and loans, take out a home loan, and even get a job.

If you want to start building a credit history while you’re in college, a student credit card may help. By making regular on-time payments, you could start building good credit. And, if you keep using it responsibly, you may be able to take advantage of the benefits of good credit when you graduate.