Students And Graduates: How To Improve Your Credit Rating
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- Make sure that all socks are paired with their right partner
- Discover the difference between bio and non bio washing powder
- Improve credit rating
- Do the ironing
A credit rating is a score that credit bureaus use to give a reflection on how creditworthy they feel someone is. The applicant’s credit payment history, current debts, the length of time the person has had credit, the type of credit and how often he or she has applied for new credit are all considered. In fact, every time someone applies for any type of credit, the lender will probably check what the applicant’s latest score is before deciding whether to approve the application.
Different credit bureaus structure credit scores slightly differently, but the rating a person will generally see will be somewhere between 0 and 1,000, with 1,000 being the very best available. So, how does a student improve his or her credit rating? Well, staying within an overdraft limit is a great starting point. So is paying bills on time. Although it may not be obvious, if someone signs up for utilities such as water and electricity and starts using it before paying for it, it’s seen as a form of credit. If you miss a payment or pay late, it can stay on your credit report for as long as six years*. So before blowing the last of your loan for living costs on a big night out, it’s wise to ensure all bills are paid.
Students are often likely to move around whilst they study, so it’s wise to ensure that the electoral role is kept up-to-date , as credit bureaus always check that an applicant is listed.
Perhaps the most innovative way to improve or build a credit rating is to get a prepaid card with a credit building feature. Once the card has been applied for and received, the customer needs to sign up for the credit building feature. Even if they’ve never had credit, it can dramatically improve a rating. Credit building features work by rolling up a year’s usual prepaid card monthly fees and turning them into a small loan, which is repaid each month. Even though the loan is for a low amount, credit bureaus note when a loan is successfully repaid on time. In fact, many thousands of people already have a better credit score through using a credit building feature. What’s more, it’s usually available at no extra cost.
Prepaid cards can help improve a credit rating in other ways - one such card offers a free Direct Debit service that helps customers to pay on time, warning them if a Direct Debit looks set to bounce. It can even offer a short term loan to cover the payment if there’s not enough money in the account – and avoid leaving a blot on credit ratings. So students looking to improve their credit rating really should study how prepaid cards could help.
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