As you move to college and begin this new chapter in your life, there are a million things you need to think about. From settling into your new surroundings, to making friends, to managing your learning responsibilities, you will be forced to learn how to live independently quickly.
Many value this independence that comes with being a college student, but with great power comes great responsibility, and you’ll likely have to deal with many different things yourself for the first time in your life.
When it comes to student finance, it’s easy to sweep it under the rug during your college years, and deal with the consequences after graduation.
But staying on top of your money throughout your time away from home will make life easier further down the road, and learning about financial responsibility now will stand you in good stead for the rest of your life.
One of the most important aspects of financial understanding is getting to grips with credit scores. If you’re able to start building your credit from a young age, you will appear more reliable to lenders, which can bring lots of different benefits.
In this post, we explore what credit scores are, how they work, and how you can help to improve your personal score during your time at college.
What is a credit score?
A credit score is a three-digit number that lenders use to assess your creditworthiness; the higher your credit score, the more credibility you have. A higher score indicates that you’re a lower-risk borrower, which could lead to a lower interest rate on a loan.
A credit score is calculated based on information from your credit report. This report includes your borrowing history, payment patterns, and outstanding debt. The three major credit bureaus – Experian, Equifax, and TransUnion – each generate their own report. It’s important to note that your score may vary slightly from bureau to bureau. Experts recommend you check all three reports at least once a year.
There are several factors that can impact your credit score, including late payments, high balances, and a long credit history. Improving your credit score may take time, but it can be worth it in the long run. By taking steps to improve your score, you could save money on future loans and lines of credit.
Improving your credit score as a student
Fortunately, there are many ways you can improve your credit score as a student. Here are four simple tips you can follow:
Pay your bills on time
Late payments are extremely detrimental to your financial health. They can make it more difficult to maintain a high credit score, and it signifies to lenders you aren’t necessarily financially responsible. With lots of different bills to pay out whilst at college, it can be useful to set up direct debits, which ensures the payments will go out automatically when they’re due.
Spend within your budget
Budgeting is an essential part of student life, as it enables you to enjoy the college experience without affecting your financial situation in the long run. Whether you look at which store you buy your groceries from, or consider if you really need that latest bit of tech, there are lots of ways you can limit your spending at college to live within your budget.
Get a student credit card
Giving a student a credit card may seem like a recipe for disaster, but they’re actually incredibly useful tools for building a credit score while at college. Many banks have tailored credit cards specifically for students, and when used responsibly, they can help to cover the costs of daily living, whilst also building your credit score in the background.
Check your report
It’s crucial that you check your report is accurate through credit reference agencies and identify any discrepancies. Check all your details are correct, including your current address, and be sure to cancel any unused cards. This type of inquiry is considered to be a soft credit check, meaning it won’t affect your score.
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Building a credit score is unlikely to be top of your list of priorities during your time away at college.
But as we’ve explored, improving your financial health doesn’t necessarily take too much time or effort – just a little bit of consideration and careful planning can go a long way. Keep credit in mind during your student years, and your future self will thank you.
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