Protect your credit rating while at Uni
STUDENTS heading off to university are being warned to be wary of taking out joint financial products with housemates as this could come back to haunt them and affect future credit ratings.
Research from ClearScore reveals that more than a third of graduates are at risk of being turned down for loans, credit cards and other financial products when they start their working lives because they are still linked to old housemates.
University is often the first time young adults take on finances for themselves.
One in three students take out joint financial products, such as opening a current account or having a joint credit card, to help make things simpler when they are living together and sharing the cost of running a home.
But three-quarters are unaware that lenders look at financial connections when assessing applications and deciding whether or not to give out credit.
Despite financial connections being old they can still affect your ability to get a mortgage or a lease on a flat – even if you have a good credit rating.
Justin Basini, CEO and founder of ClearScore, said: “Graduates coming out of university are unaware that simple financial decisions like having a joint current account with their housemates means they run the risk of credit rejection. Even if your own credit report and score are in great shape, a mate who doesn’t manage their money could damage your chance of successfully gaining credit.
“I’d urge everyone to check their credit report to look out for housemates they may still be connected to. If you do have any financial connections still lingering, you need to contact the credit bureaus directly to cut the tie.”
FINANCES FOR STUDENTS
Check your credit report to see if you are ‘linked’. Once you’ve taken out a joint financial product with someone, a connection is created that remains on both of your credit reports for six years, even after the account is closed. If you do have a financial connection that is still lingering, you need to contact the credit agencies to get them to remove the link.
Don’t use up the full limit of credit you have available on overdrafts and credit cards. If you’re always hitting the limit on your credit card or overdraft, lenders might view this as risky behaviour.
Make sure you push yourself to pay more than the minimum on credit card repayments each month. Even just £10 more will help to tackle the debt, rather than just paying the interest. If you don’t you will get caught in a debt spiral for years and years, and get slapped with hefty sums of interest.
Put your name on some utility bills – the more evidence there is of you paying bills and credit on time, the better your credit score will be.
Close old credit or bank accounts – this is a common pitfall. If you have any accounts that remain open, even if there is no balance on say a credit card, lenders will think you have access to enough credit already... or have too many cards on the go.
Don’t apply for multiple cards or financial products. Applying for several at the same time can damage your credit score and dent your chances of getting a good deal, not to mention making it look as if you’re desperate for credit. Not a good look. If you are rejected for a card don’t panic and apply for a load more. Take the time to think about why this happened and what steps you can take to improve your chances next time round. Get free access to your credit file via Clearscore.com, equifax.co.uk, experian.co.uk or callcredit.co.uk.