Students should think about their credit reports

Credit cards

Latest figures show that studying at university costing around £13,000 each year so it is no wonder that 75pc of students are in debt. It is estimated students owe around £17,500 when they graduate.

Starting out on a career with such as debt burden can cause problems particularly if you have not been successful at managing your debts properly.

The ability to borrow money for a car or a mortgage, once you have graduated, could hinge on how good your credit report is, so building a good credit history at University can be important for your financial future.

What is a credit report

Basically a credit report is a log of loans that you have taken out, be it from credit cards or personal loans, and a record of how you have repaid those loans. So if you have missed a repayment then this will be added to your credit report for future lenders to see.

Loans from The Student Loans Company are not added to your credit report, but all other loans are including County Court Judgements (CCJ's) and bankruptcy orders.

As lenders use your credit report to assess your risk of meeting loan commitments, it is important that you manage your loans as effectively as possible to avoid defaults being added to your credit report.

Landlords may also want to see your credit report, as they want to ensure that you will pay their rent, so your credit history can help, or hinder, your ability to rent accommodation in the future too.

Managing your credit history

So taking care of your credit history is important. Although we don't recommend becoming paranoid about your credit report, after all being at University is a time of learning and fun, there are steps that you can take to protect your credit report as much as possible.

  • Register to vote
    You probably aren't too concerned about voting when you are a student, but the fact that you are on the register of voters substantiates your identity. In this time of increasing identity theft, this is important. Also, from a credit history point of view, your credit report shows if you are registered to vote or not.
  • Sensible budgeting
    Borrowing money caries a responsibility so it is very important that you set a sensible budget and keep to it. Even if money is tight, keep up with loan payments as defaults could be harmful in the future.
  • Tell lenders if you have repayment problems
    If you cannot meet a loan repayment , tell your lender straight away. They will almost certainly be sympathetic as long as your situation is not too bad, and could revise your repayments until you get back onto your feet. You owe the money to them, though, so make it a real priority to meet your loan commitments
  • Protect your identity
    If your identity gets stolen, then someone could seriously harm your credit history by using your details to defraud others. Fraud from identity theft is hard to rectify and it can take considerable time and effort to eradicate the effects from your credit report.
  • Improve your credit rating
    See our article about improving your credit rating here

Checking your credit report

Most of the points about building a good a credit history as possible whilst studying at university, are based on common sense. Don't borrow too much, set a sensible budget and then keep to it.

You can keep tabs on your credit report though, and this might be sensible if you are having to borrow more than you'd like or start to experience problems with repaying your debts.

The easy way to see check your current credit status is to take a free, 30-day trial of CreditExpert, the online credit monitoring and identity fraud protection from Experian. This will give you access to your full credit report and also alert you by text or e-mail whenever there is any significant change to your credit report that could indicate an attempted ID fraud.

Click here to see your free credit report.

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