Your university years are meant to be some of the best of your life. Moving on to campus, taking on responsibility, frequent socialising and long summer holidays are just some of the factors which make university such an enjoyable experience. However, this lifestyle does come at a cost – in the form of a hefty student debt.
Last year, first year students were faced with tuition fees of up to £9,000 per year at university. Previously the cap on tuition fees was £3,375 annually, but this figure has dramatically risen. If students also require maintenance loans, to help pay for accommodation and living expenses, they will pay an additional £5,500 per year.
Thanks to new funding provisions for English universities, students can now loan money from the government to cover these immediate costs and repay the debt proportionally when they start earning an income. Though these new arrangements do make it easier for students to attend university, these substantial student loans can leave graduates at a disadvantage.
According to the Telegraph, students who graduate with a high level of debt will struggle to manage a mortgage or other repayments after they leave. To make sure you’re excluded from this category, you need to seriously assess your financial situation and start working to prove your money management skills.
While studying, money and mortgages aren’t something you want to have to worry about. However, if you begin to build yourself a good credit rating now, you’ll be ahead of your peers once you move on from university.
With a few pointers, it’s easy to build a good credit rating that will make you attractive to lenders in the future.
Firstly, what’s a credit rating?
A credit rating is how a financial institution decides whether you can be trusted to repay a debt. Banks want to know that you can handle a debt and make repayments on time before they will consider lending you money. Your credit score is determined by your credit history, which is held by credit reference agencies like Equifax and Experian. When you apply for credit, these agencies send your credit history to the appropriate lender who then uses this information to determine your credit score. Anyone with credit, whether in the form of an online credit card or even a mobile phone contract, will have a credit history.
Don’t overdo it
Maintaining a clean credit record is no easy task while you’re at university. While it sounds simple, paying your bills on time can be hard for any student with a busy social life to manage. However, this is a vital step towards ensuring your credit history looks good to lenders. The easiest way to do this is to set up a direct debit from your account so that any bills automatically get paid without you even having to think about it.
Get a credit card
Many credit providers now offer specific student credit cards designed to help people build a good credit score while they are studying. These cards are known for providing manageable credit limits, interest rates and monthly payments. The aquacard range is the perfect example and also includes access to a 24-hour customer helpline and SMS reminders so you never fall behind on payments.
Time your application
When you apply for credit it leaves a mark on your credit history. This isn’t necessarily a negative, but some lenders do take into consideration the number of times you’ve applied for credit when deciding your credit score. Space out any applications you want to make for a credit card, mobile phone contract or car insurance to avoid appearing as a potential risk to lenders. If you do happen to be rejected for credit, check your credit history immediately, find the problem and rectify it, before you apply again.
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