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Student finance: How to Score


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Justin Basini, ClearScore’s founder and money expert, explains how to graduate financially fit.

For many students, immediate priorities like paying this term’s rent (or even funding the next round of drinks) are understandably top of mind. 

But thinking about your finances now can really come in useful in the future- for example, when you’re buying a house or taking out a loan.  We know that 52% of young people have never checked their credit score, but this one number can affect so much. Many future financial decisions that seem daunting now can be made less stressful by having a good credit history.

A credit score is shorthand for how likely you are to repay any money that you borrow. The higher your score, the less risky you are to lenders.

Landlords will often run a credit check before letting to you and your score has a major impact on the financial products – such as a credit card or mortgage – you’re offered. Even your broadband provider will do a credit check. The average student has a credit score of just 302 (well below the national average), so many new grads struggle to get on their feet after university.

Each time you borrow and pay back on time you improve your score. But if you miss a payment or exceed your overdraft your score will be damaged. You probably already have a form of credit – like an overdraft on your student account or a mobile phone contract – so you have already started to build your score. Whether you are aware of it or not.

As with all important things in life, it takes a bit of time to build your credit score, but the good news is you can start right now. Here are five easy things you can do to build your credit score in under an hour:                                                            

1. Move your mobile phone or utility contract into your name – by having a few small bills in your name, you are demonstrating to the credit checking agencies that you can meet regular payments, which will start to build your score.

2. Check with your bank whether you qualify for a credit card, and put a small amount on it each month, always paying it off – as well as your credit score, banks will take into account any history you have with them. It might be easier to apply for a card with your existing bank than a new provider.

3. Register for the electoral roll at your banking address. Signing up for the electoral roll might not be a top priority, but most credit checkers use it to establish your identity, so  it’s a really simple way to boost your credit score. There are Scottish, Welsh and EU votes this year, so lots of opportunities to vote too.

4. Check your credit report and fix any mistakes - Research suggests that 38% of people who check their report find mistakes, the most common being credit products you never applied for (39%) and wrong addresses (23%). You could also find an incorrect financial link, for example to someone who used to live in your student house. Check your report thoroughly – if you find anything that looks wrong, fixing it is quick and easy. 

5. Get organised - Don’t let your credit score take a hit by forgetting to pay your bills. Missed and late payments for anything stay on your credit report for six years. Instead, set up direct debits to pay your utility bills, phone bill, credit card and rent. So even if your bills end up at the bottom of a large stack of papers, your credit rating will still be soaring high.

To find out more visit ClearScore.

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