How to Improve Your Credit Score as a Student

Looking to improve your credit score as a student? Here are our top tips on how to boost your rating 👇

Your credit score is one of those annoyingly important things that is easy to ignore – until it’s not. From mobile phone contracts to getting on the property ladder, your credit score can be a key factor for companies when deciding whether to lend to you, how much to let you borrow and how much interest to charge you.

Your personal credit score is built on your credit history. Credit reference agencies such as TransUnion, Equifax and Experian can show you your credit score online with a detailed report to show you what factors are affecting your final score.

If you’re eager to know how to improve your credit score as a student, read on. We’ve put together some practical tips to help bring that number up!

1. Pay your bills on time

Something as small as a late payment on your phone contract can affect your credit score, so make sure to keep on top of your monthly outgoings.

From Netflix and Spotify to gas, electricity and council tax, keeping your bills paid on time shows to potential lenders that you’re capable of managing your finances. If direct debit isn’t an option, it might help to set up due date alerts on your phone, so you don’t forget to pay a bill on time.

Another option would be to charge all of your monthly bill payments to a credit card and pay the balance off in full every month. That way, you’ll never miss a payment and you’ll also build up history of on-time payments – just make sure you do pay off the balance monthly, or this option will have the reverse effect on your score.

2. Don’t push it to the limit

Life at uni often means keeping to a tight budget, and that can be harder for some people than for others. If you don’t have parents to support you financially, for example, it’s really tough to survive on just a student loan. If you’ve taken out a credit card, try to use it sparingly and only when you absolutely need to. A couple of takeaways here and there are fine but splashing out on credit is a quick way to tank your score. 

When you get accepted for a credit card, it’ll have a set limit e.g. £2,000. If you can, try to keep utilisation to 25% of your limit or lower, as this will definitely be seen positively be lenders and can help to boost your credit score!

3. Get on the electoral roll

If you aren’t already registered on the electoral roll, take a few minutes to do it now. Even if you don’t plan to exercise your democratic rights, registering to vote can give your credit score a nice little boost. Seriously, this simple step can make a big difference; it allows credit reference agencies to verify who you are and confirm that you are a legit person with a credit history. You can register for the electoral roll here.

4. Fix mistakes on your report

Your credit score is built on all the information accumulated in your credit report, so you’ll want to make sure they’ve got their facts straight. Any inaccuracies on the report may be working against your score and bringing it down. An example of this could be an account appearing as ‘open’ when it’s actually closed. By checking your report regularly, you can identify any errors and get them fixed to bring that number up.

5. Play it cool with credit applications

Need credit quickly? It’s worth speaking to the finance department at your university to see if you might be able to access a loan as a first port of call. The reason we’re suggesting this route first is because if you make too many applications for credit in a short space of time, it will hamper your credit score. If you’re rejected for credit, it’s worth taking a breather and looking for alternatives before trying again. When you do, double check that your credit report information is still accurate.

6. Build your credit score

For many students, a low credit score comes from having little to no credit history at all. That’s a good thing in theory, but to lenders, you’re basically a blank canvas. This is common for young people or those who are new to the country, but there are ways to bump it up without getting into debt. Services like LOQBOX are designed to help you build up a good credit score by effectively acting as a digital piggybank that reports back to the main credit reference agencies.

7. Use soft searches for new credit

When you apply for credit, the lender will perform what’s known as a ‘hard credit search’ to check if you’re eligible. While this may be necessary in some situations, hard credit searches do impact your credit file, so it’s worth asking lenders to do a ‘soft search’ where possible. A soft search gives you a rough idea of whether you’re likely to be accepted for credit, and it doesn’t impact your credit score. That means it won’t be visible to other lenders on your credit report in the future.

8. Keep your finances separate

When you’re living with your partner, it can be easier to keep track of finances through a joint account. Here’s the thing: if they have a bad credit history, that could actually be affecting yours.

If you suspect that might be the case, it might be worth cutting ties – financially speaking. After you’ve opened up a new personal account and moved over your direct debits, you can remove yourself as a joint account holder on the other, either through online banking or giving your bank a call.

Once you’ve done that, ask all three credit reference agencies (Experian, TransUnion and Equifax) to break the link so that your partner or ex-partner’s financial situation doesn’t have an impact on any future credit applications.

9. Don’t worry about your student loan

Scared to check your credit score due to student loans? We have some good news! Student loans don’t affect your credit score... at all. Student credit scores may be low for other reasons such as lack of credit or credit card debt, but at least that’s one less thing to worry about.

No matter how high your loan, it won’t appear on your credit file. However, if you end up applying for a mortgage, lenders may still factor in your student loan when deciding how much you can borrow.

Looking for more advice on student finances? Read our blog on how to get the most out of your student loan.

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