Improving your credit score
10th June 2013
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Ever wondered how your credit score affects your life?

It’s a sad day when you realise you’re no longer a student and you actually have to start worrying about money, and, God forbid, things like credit scores. A credit score is unheard of in university when you’re living off a loan which has been handed to you on a plate, and frittering it away on clothes and alcohol. But when you leave education and (eek) enter the real world, you will start to realise that all those Topshop store cards you signed up for are coming back to haunt you.

Having a good credit score is vital for things like switching banks, applying for overdrafts, loans, mortgages, credit cards, and buying a house. Ironically, your credit score can be affected by existing overdrafts, existing credit and store cards, and past loans. If you want to have a fighting chance of getting anymore of these in future, and being allowed to take out a mortgage or rent a house, you’d better have a squeaky clean record. This is something they don’t tell students enough, and certainly isn’t mentioned when they’re being talked into spending hundreds on store cards and then ignoring the bills.

Credit cards are not a bad thing if you keep up with the payments. In fact owning a credit or store card and paying it off in full each month can actually improve your credit score, because it shows lenders you’re reliable. As can having an overdraft which you never dip into. If you do use your overdraft, try not to miss payments or go over your limit, because this will affect your credit score, and not in a good way. This is something young people do a lot, without any concern for how it might affect them in the future. So, if you’re currently studying or you have a child at Uni, teach them about how to be careful with money, and save the hassle of bailing them out 5 years down the line!

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Sarah C

Member since: 10th July 2012

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