Back to Uni – Shaping your Credit Rating
University can be one of the best periods of your life. New surroundings, new friends and new life experiences can broaden horizons and create a truly memorable time. Going to university is the beginning of your future; the decisions you make and results you graduate with can have a big effect on where your life goes from here.
One of the biggest life changes you’ll experience is moving into student accommodation or a shared house for the first time. This can be a daunting experience, but also gives you plenty of freedom as well, something that most teenagers are keen to enjoy.
Before university, many students may not have had a credit card, or never given the subject of credit a second thought. Although there is nothing wrong with taking that approach, it is always beneficial to become as informed about subjects that have long-term implications such as credit. With all these new experiences and responsibilities, it is easy to forget the little things.
Credit scores – what are they?
A credit score is a rating generated to assess your credit history and other financial details to show how likely you are to repay a loan or any credit given to you.
These scores are put together by agencies such as Experian and can be seen by companies dealing with financial products, such as banks and credit card companies.
Your student loan will not affect your credit rating, as repayments will be taken from your future earnings .
Effects of a poor credit score
Credit ratings and scores can affect your application for a range of financial products and services that you may want or need in the future.
Credit ratings can influence the availability of personal loans, credit cards and they can also affect your application for further accommodation beyond university, when it comes to renting standard properties or even applying for a mortgage when looking to climb the first rungs of the property ladder. It can even affect the cost of your car insurance.
Some employers will credit search potential employees to assess how reliable a candidate is.
Although a credit report is designed to provide credit providers with information to assess your likelihood of repayment, many companies will also use your rating to predict different characteristics.
Changes to credit scores
New changes to credit reports are currently being proposed. Rent repayments, and the efficiency and reliability, of them will begin to affect your credit score according to reports from MoneySavingExpert.com and Experian. This will happen in much the same way that mortgage payments are assessed and are added to credit reports.
This information is likely to go under the radar for most students, but the issue of credit ratings and the need to manage them is one that can have implications for the future. By keeping on top of your spending you are making excellent progress to benefit your future.
The pros and cons of the proposed change
Pros
- The checks are only based upon your personal repayments, not upon any other tenants you may share the property with.
- Prompt payments can help to improve your credit score if you have a poor credit history.
- If any information is incorrect you are within your rights to have this information corrected.
Cons
- An additional worry on top of university work.
- Correcting information may take time.
Tips for managing your credit rating
Use direct debits –Arrange manageable direct debits for your rent repayments with your letting agency or landlord.
You may decide to pay the rental amounts on a month by month basis, or to put your mind at ease, you can usually make lump sum payments covering several month’s rent at a time – leaving you safe in the knowledge that the rest of your money can be split between the things you need it to be. Be sure to agree a payment schedule with your landlord first as you may be bound to a certain payment method by your contract.
Keep people informed – If you are going to miss the payment date, inform the letting agents or landlord as soon as you realise this.
By informing the company or your landlord you are more likely to avoid any possible late payment charges. Your honesty is likely to be appreciated.
For example, if your student finance has not been paid when it was meant to be (as can often be the case) and your rent is due, contact the agents and arrange a date to send payment by.
Letting them know about your situation can help you avoid the hassle of being chased for rent, saving everyone time and stress in the long run.
Many landlords and letting agents will understand your situation, particularly if they deal exclusively with students.
Share this:
Category: Credit Score
