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How to build your credit score as a student

As a student, it’s unlikely you’ll have much of a credit history, but that doesn’t mean you can’t start building your credit score and getting into good habits now. 

If you want to find out how you can start building your credit score, use our guide below to help.

What is a credit score?

If you’re applying for finance, lenders will calculate a credit score to see what products and rates you qualify for and what kind of borrower you are.

Your credit score can change throughout your life, depending on your financial history and circumstances. People with a higher credit score are often seen to be a lower risk to lend to, so looking after your credit score is important. 

Do student loans affect your credit score?

A student loan doesn’t affect your credit score and also doesn’t appear on your credit report. If you want to apply for finance in the future, whether it’s for a loan, credit card or a mortgage, the lender will only know you have a student loan if they ask on the application. 

Other types of lending, such as a student credit card or student overdraft will appear on your credit report. 

Does a student overdraft affect your credit score?

A student overdraft will appear on your credit report, but it won’t affect your credit score if you’re careful with it. 

If you do use your overdraft, it’s important to try pay this back in a timely manner and avoid going over your arranged overdraft limit. Going over your arranged overdraft limit on a regular basis may have a negative impact on your credit score and could signal to lenders you’re struggling to manage your money. 

If you don’t use your student overdraft, it’ll still appear on your credit report, but will show a balance of 0.

How to build a good credit score as a student

1. Get on the electoral role

Joining the electoral roll if you’ve moved into student accommodation, or a shared house, is an easy way to boost your credit score. You can do this online and you may even be able to register two places – your address during term time and your home address.

2. Pay on time

One way to help build your credit rating is to pay your bills on time. Late payments could have a negative impact on your credit score.

Direct Debits and standing orders can be a useful way to make sure your payments are made on time. You can schedule them to happen so the money is moved without you needing to do anything.

3. Don’t keep applying for credit

If you get rejected for finance it may seem tempting to apply again or try another provider, but you should resist doing this. Making multiple applications will be recorded on your credit file and can affect your credit score.

If you’re wanting to see what rates and types of finance you’d be eligible for, use eligibility sites that leave a soft credit footprint. A soft footprint won’t be seen by other lenders and can let you see what you’re more likely to be approved for.

4. Consider taking out a student credit card

Credit cards can be a useful way to start building up your credit score. You may find some banks offer a student credit card, which often has a lower limit. If you’re sure you’ll be able to meet your repayments on what you spend, a student credit card could be worth considering. Remember, credit cards are not free money and should be used responsibility. 

5. Check your details

You can check your credit report at one of the three major UK credit reference agencies (TransUnion, Experian and Equifax) to see if all your details are correct. There may be a small fee for doing this, but it can be useful. You may also be able to query anything on your credit file that you don’t agree with. You can check your credit report as often as you like and it won’t affect your credit rating or credit score.

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