Credit scores have a huge impact on your future, impacting your right to rent or buy a property, take out a loan, and even get a job. Simply put, credit scores are essential to your future. But if you’re unsure what a credit score even is, let alone how to improve it, you are definitely not alone. In this article, we will provide you with all the things you need to know, as well as tips on how to help improve your credit score as a student.
What Is A Credit Score?
A credit score lets lenders easily calculate what kind of borrower you are, the rates you qualify for, and how quickly you will pay back your loans. Your credit score can change throughout your life as you change jobs, get a mortgage, take on more responsibility, and make credit card payments.
The most important thing to remember is that a high credit score is good. The higher your score, the less risky you look to potential lenders. So, it is important to maintain and check your score regularly to help you better understand your current credit position.
The Benefits Of A High Credit Score After University
Leaving university with a shiny new degree is an exciting prospect, leaving you ready to pursue your dream career. “The benefits of a high credit score cannot be underestimated,” says mortgage specialist Town & Country Mortgage Services. “A high credit score will help you buy your dream home, get that great job, and take out that all-important loan.”
The benefits of having a good credit score can help drive you towards success, offering:
- Low-interest rates on credit cards and loans
- A higher chance of credit card approval
- Higher limits on borrowing
- Easier mortgage approval
- Better care insurance rates
- And, of course, bragging rights!
Let’s take a look at the ways you can improve your credit score as a student so that you can take advantage of the benefits when you leave university.
1. Sign Up To The Electoral Roll
Registering to vote is one of the simplest ways to boost your credit rating as a student. If you aren’t on the electoral roll, you will find it hard to successfully apply for credit. Many students forget to sign up to the electoral roll after moving away from home. And we can understand why – the whole process can seem like a hassle.
But if you want to improve your credit rating, signing up to the electoral roll will make a big difference. And besides, it’s all done online now, so it literally only takes two minutes. It couldn’t be easier.
2. Pay Your Bills On Time
Late payments will always affect your credit score, so it is important to prioritise paying your bills on time. This includes any rent payments, utility bills, mobile phone contracts, or any loan repayments you are making both during your time at university, as well as once you’ve finished.
3. Get Authorised On A Family Member's Credit Card
Becoming an authorised user on a family member’s credit card is a great way to grow your credit score quickly. You can use and make purchases on the card as if it were your own, however, the credit card technically belongs to your family member.
This can be a great arrangement if you both trust each other to make payments on time, every time. It also helps you build a good credit score from a young age, setting you up for future success.
4. Keep Old Accounts Open
Remember that account you opened with your parents when you were a teenager? Well, what you probably didn’t know is that the older your account is, the more favourably you will appear to lenders.
If you have old credit accounts you are no longer using, don’t close them as this could lower your available credit. Instead, keep them open to gain as much from them as you can.
5. Pay Off Your Student Loan
We know this point is a difficult one, which is why we have left it till last, but diligently making your student loan repayments each month will help build your credit.
No lenders want to see a huge, untouched mountain of debt on your record. However, if you can prove you are making regular payments towards paying it off, your credit score will look far more favourable.
What Does A Good Credit Score Look Like?
All lenders have their own standards when it comes to rating good credit scores. However, we have listed a few examples below to give you a rough idea of good credit scores:
- Experian rate a good credit score as 880 out of 999.
- Equifax rate a good credit score as 420 out of 700.
- TransUnion rate a good credit score as 781 out of 850.
It is important to remember that just because you have a good credit score doesn’t mean you will be guaranteed to be offered favourable credit cards or low-interest rates. However, if you are looking to take out a credit card or a loan after university, knowing your credit score is a helpful place to start.
Improving your credit score can take time and it can be helpful to keep a close eye on your credit score to monitor areas for improvement.
By following the advice we have outlined above, you should see your credit score improve over time, helping leave you better set-up for success when you come to leaving university.
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