Student credit score
Despite talk of increased arrears and wider economic concerns, it appears tenants are increasingly worried about the long-term effects of poor credit score.
What is a credit score?
Your credit score is created from information held in your credit report, also known as your credit file. Your credit score can differ between lenders or even between different products from the same lender. The information held on your credit file and your credit application form might be used to decide:
- Whether to lend to you
- How much to let you borrow
- How much interest to charge you
The most recent information on your file will have the most impact. This is because lenders will be most interested in your current financial situation. That said, your financial decisions – good or bad – from the last six years will still be on record.
Why are credit scores important?
Private renters such as students are particularly concerned that their credit scores could hamper them when eventually buying a home. Surveys show that nearly half of renters say owning a home is a life goal of theirs. And, one in four are actively saving for a deposit currently. Furthermore, the experience of the pandemic and lockdown among renters has strengthened home ownership ambitions. Over a quarter said lockdown has made them more motivated to buy their own home.
Do student loans affect your credit score?
A student loan doesn’t affect your credit score and doesn’t appear on your credit report. If you want to apply for finance in the future, whether it’s for a loan, credit card, or a mortgage, the lender will only know you have a student loan if they ask on the application. Other types of lending, such as a student credit card or student overdraft will appear on your credit report.
How to build your credit score as a student?
You can help to build up your credit score by checking the following:
- Get on the electoral role
- Pay on time (direct debits, rent etc)
- Don’t keep applying for credit
- Consider taking out a student credit card (to build up your credit score)
- Check your credit report on Experian and Equifax
Take a look at our Student Properties Norwich today.