Students and Credit Scores

10th Dec 2024

As a university student, how you manage your finances can significantly impact your future credit score. Your financial habits during your student years lay the foundation for your credit footprint, which will follow you into adulthood. This is often the first time you'll encounter bank accounts with overdrafts, student loans, and perhaps even student credit cards.

Being responsible with your finances during university sets you up for a strong credit score later in life. A good credit score can help you secure better offers on loans, mortgages, and other financial products, as well as making it easier to find a student flat to rent or be accepted for finance on a car needed to take you to your first graduate job. Conversely, irresponsible spending and accruing debt can harm your credit score, potentially taking years to repair.

Tips for Protecting Your Credit Score

Avoid Missed Payments - Always pay your credit card bills and loan repayments on time. Late payments can significantly damage your credit score.

Try not to Overspend - University expenses can add up quickly, including travelling costs, rent, textbooks, and social activities. Learn to budget effectively and avoid spending more than you can afford.

Monitor Your Finances - Keep a close eye on your bank balance and understand when major payments are due. Avoid the temptation to apply for multiple credit cards or loans in a short period, as this can negatively impact your credit score.

Consider Part-Time Work - If you need extra money, consider finding part-time work instead of relying solely on credit.

Building Your Credit Score

Even as a student, working part time only, you can begin building a positive credit history. Download one of the main free credit check apps, and get into the habit of checking yours every month or so. There are other positive steps you can take to build your credit check, such as taking a mobile phone contract which you pay every month, making sure that you are listed on one of the utility bills on your student house (and that the bills are paid when due); or getting a student credit card with a low limit that you manage responsibly and pay off in full every month.

What to Do If You're Struggling with Debt

If you find yourself struggling with debt during your studies, it's important to seek help as soon as possible. Firstly, get support and advice from someone like an older family member, or the welfare officer at your student union. Debt charities such as StepChange are also there to help. Make a plan for managing your debt, prioritising the most expensive credit. You might also consider looking for a job which fits around your studies, or working full time during the summer or at Christmas to boost your income.

Lenders will not excuse debt simply because you are a student. Avoid missing payments, as this can lead to your debt being transferred to a collection agency, further damaging your credit score. Negative financial information can remain on your credit report for up to six years, impacting your financial opportunities long after graduation.