How To Improve Your Credit Score At University: Tips & Tricks
Learning how to budget as a student is one of life’s big lessons.
We all know how difficult it can be to juggle your bills, your grocery needs, and have some spends for nice things from time to time when you first move to university.
Your credit score might not even be something that you’re even aware of before moving to university.
In fact, you probably won’t have much of a credit file to talk about when you are young and just starting out in life away from home.
This is a short guide to help you find out more about what it is and how to improve your credit score over time.
What Is A Credit Score?
Whenever you apply for finance of any kind, whether that’s a small loan, a store card, credit card, or in future a mortgage, the lender will always check your credit history and calculate a credit score.
This helps the lender to see what products and rates of lending that you personally qualify for, and what type of borrower you are likely to be.
Your credit score is constantly changing based on how you act throughout your life, taking in different financial circumstances and your history.
There are a few different things that can have a negative and a positive impact on your credit score and learning how to improve your credit score is important.
People with a high credit score are viewed as less of a risk to lenders than those with a low credit score, and therefore have access to a wider range of financial products and services.
What Do You Need A Good Credit Score For?
It is very unlikely that you’ll have enough time to damage your credit score irreparably as a student.
Although, you can begin to work on things and build good habits that will help you long into adulthood, after you’ve left university.
There are quite a few things that your credit score will be used for during an application for credit.
Here are the main financial products and services where your credit rating will be important:
- Opening a bank account – you would need a really poor credit score to be rejected
- Applying for, or extending, an overdraft
- Credit card
- Mobile phone contract
- A loan of any kind
- Insurance – whether it’s for home contents, a car, or any type of insurance where you pay monthly
- Mortgages
Also, lenders look at no credit history, or minimal credit history, almost as badly as they do a bad credit file.
This is because it is hard to work out what type of borrower you will be if you’ve not got much history of doing so.
Your credit score won’t be the only factor in determining your success for a credit application, but it is an important one.
What Are The Credit Reference Agencies?
Annoyingly, there isn’t just one central place where you can get your credit score.
Instead, there are three main credit reference agencies in the UK that will each have a slightly different way of calculating your credit score and it will differ between them.
It is possible to check your credit report for free with all three agencies, although you can also pay a fee to take a closer look at your report.
You can check your credit file with:
Experian
Experian is one of the leading credit reference agencies, where you can access the information for free.
A CreditExpert service is also available at a monthly cost.
You can, though, sign up to a free 30-day trial, just be sure to cancel before payment is taken at the end of the 30 days.
Equifax
The easiest way to check your credit score with Equifax is to use ClearScore, which is completely free of charge, forever.
You’ll gain insight through weekly updates to your credit file, whilst also seeing tips on how to improve your credit score.
Although ClearScore is not directly linked to Equifax, their data is used to clearly highlight your personal situation and show what credit cards and loans you would likely be accepted for.
There is also a 30-day trial directly through Equifax, with a monthly cost thereafter.
TransUnion
You can check your TransUnion credit score through a service such as Credit Karma.
TransUnion isn’t as widely used by lenders to calculate your suitability to financial products as the other two main agencies, but it can still be important to understand your overall credit score.
How To Improve Your Credit Score
Learning how to improve your credit score is important.
The earlier you do this in life, the healthier your credit score will be and the more opportunities you’ll have open to you.
It is also a good way to manage finances in general, to not overstretch yourself and to live within your means.
Below are a few simple tips to help your credit score improve whilst at university.
1. Update The Electoral Roll
One of the easiest ways to improve your credit score is to join the electoral roll.
This indicates an accurate address as well as allowing you to vote in local and general elections – which we advise that you all do as it is your democratic right!
Whether you are in a student apartment or a shared house you should update the electoral register.
You might be able to register your student address in term time and your home address.
2. Pay Bills On Time
The best way to stay on top of your debt and to improve your credit score is to always pay your bills on time.
A late payment will have a negative impact on your credit score.
Set up direct debits or standing orders to make things automatic and take the stress out of your hands.
When paying debts, if there is a minimum monthly payment, try and pay more than that amount whenever you have the funds.
3. Be Careful With How Much Debt You Have
Remember that the proportion of credit you’re using will be used to calculate your credit score.
If you are at the maximum limit of your credit card or student overdraft this will count against you.
Lenders like to see that you’re using some of your available credit but that you’re paying it back on time, and with regular payments.
4. Stop Applying For Credit
If you’ve been rejected for an application for credit, it can be really tempting to go looking for a different product or lender.
You should put a pin in it and try to hold back that urge.
If you make multiple applications in a short period of time and keep getting rejected, this will make it harder to be accepted in future as your credit score will suffer.
5. Think About A Student Credit Card
This might seem counterintuitive based on what we’ve said so far but hear us out.
A credit card, when used carefully, can be a great way to start building up positive credit.
Some banks even offer student credit cards with a low limit.
A good way to approach this might be to use your credit card to pay for your weekly grocery shop, as long as you know you can pay it off at the end of the month when your statement is delivered.
We’d recommend being careful with this though as borrowing money can be a risky game if you’re not careful – always do your research and only borrow within your means!
6. Check Your Personal Details Are Correct
Check your personal details with the 3 main UK credit reference agencies to make sure that your details are correct.
Also, anything you see on your credit file that you don’t think is correct, can be flagged with the agency and changed to better reflect the truth.
The act of checking your credit file won’t affect your credit score or rating.
Does A Student Loan Count Towards Your Credit Score?
If you’ve taken out a student loan for university, you might be wondering whether it affects your credit score.
You’ll be glad to know that it doesn’t appear on your credit file and has no impact.
The only time you’ll have to disclose a student loan and its amount is if it appears on an application form, but this isn’t always the case.
There are other types of student finance and credit that do appear on your credit file though.
Student Overdrafts
Unlike a student loan, your student overdraft will appear on your credit file.
However, if you are careful with how you use your overdraft it shouldn’t have a negative impact on your credit score.
If you use an overdraft, plan to pay it back as quickly as you can, and wherever possible avoid going over the limit you’ve been given and don’t go into an unarranged overdraft.
If you do go over your limit on a regular basis this will have a negative impact on your credit score, showing lenders that you struggle to manage your money.
For those who have a student overdraft it will appear on your credit file with a score of 0.
As you can see, there are a few ways in which you can learn how to improve your credit score.
Staying on top of your finances, keeping any debt in check, and being proactive with your financial life whilst living in student accommodation, will stand you in good stead for the rest of your adult life.
If you’re worried about your money, there is help out there through your university and from student debt charities.
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