Money and Finance

How can you build your credit score when you're a student?

How can you build your credit score when you're a student?

Building up your credit score is an important part of your financial future. A strong score can indicate to lenders that you can be trusted to pay back what you owe, so you’ll be more likely to get approved for things such as car loans or mortgages.

Whilst taking these steps might feel like a long way off when you’re a student living off tins of beans, it’s still worth thinking about. Putting in a little work now will make life easier for you when you graduate, and help you move forward with the next stage of your life. In this post, we take a look at some of the easy things you can do to boost your credit score as a student.

Get a credit card – and use it responsibly

When assessing your credit score, one of the features that lenders look at is your credit history. If you haven’t borrowed money before, they have no idea whether you’re likely to pay it back or not. It doesn’t matter if you’re an excellent saver and have plenty of money tucked away – you’re still a risk. In comparison, if you’ve borrowed little and often, and always paid it back on time, they can feel more confident that you know how to manage your finances.

Therefore, one good way to boost your credit score is to get a credit card – but crucially, you need to be able to use it wisely. When funds are tight, it’s tempting to put a few nights out on your card and put off paying until your loan comes in, but this will only hamper the benefit of having the card in the first place.

Instead, imagine it’s a debit card. Use it for regular expenses such as your weekly shop, but make sure you pay it off in full before the due date. Many banks allow you to set up a standing order for the full balance to come out from your current account, so this is good to set up to save you having to remember. There are also some student credit cards available, which encourage you to only spend money you already have via high interest rates and low spending limits.

Register to vote

Joining the electoral roll is important on many levels. Not only does it allow you to vote, and therefore gives you a say in how the country is run, but it also improves your credit score. Why? Because it allows lenders to confirm your identity, reducing the risk that you’re a fraudulent individual. It doesn’t have as big of an impact as your financial habits, but when you’re a student without a mortgage, every little bit helps.

Of course, one of the issues with registering an address is that you likely live in one place during term time, and another in the holidays. To combat this, students may be eligible to register twice, once at their uni address and once at home. This doesn’t mean you can vote more than once.

Pay your bills on time

It’s not just mortgage or car payments that impact your credit rating. Students can get the benefits too, by regularly paying utility and phone bills. Historically, rental payments weren’t included in credit ratings, but in recent years there are certain schemes such as Credit Ladder that allow you to get these counted as well.

The only thing to be conscious of is shared payments. It’s common for students to get several names put on utility accounts, so that you can all pay your share. However, if one of your housemates forgets or pays late, it’s not just their credit score that will be affected, it’s yours too. For this reason, it can sometimes be a good idea for each person to take responsibility for one type of bill and then sort out the money between themselves. However, this does mean you’ll have to find the cash if someone is short, so the best plan will depend on how financially responsible your household is.

Prepare for the future

Building a good credit score might be the last thing on your mind as you head off to uni, but how you manage your money now can impact your choices in the future. By completing these simple steps, you can better prepare for your future after graduation.

Keep reading

Articles we think will help you ace your job search.

Money and Finance

Creative Side Hustles for Students to Earn Extra Cash

Need a flexible way to make extra cash as a student? Explore creative side hustles that fit your schedule and interests! From video editing and social media management to graphic design and photography, the gig economy offers students the chance to earn while developing valuable skills. Check out Careermap's guide to find the right side hustle for you and kickstart your earning potential!