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Credit scores what are they and what can I do to improve mine

Credit scores what are they and what can I do to improve mine

You may have seen information on credit scores, but what exactly is a credit score and as a student can you really do anything to improve yours? Read on to find out more.

What exactly is a credit score?

A credit score or credit rating (these terms seem to be used interchangeably but basically mean the same thing), is a prediction of how likely you will be to repay money you owe.  This for example could be how likely you would be to repay a mortgage, a loan or a credit card.  It is shown as a number and many banking apps have some sort of credit scoring integrated into them. If you apply for credit, maybe for example for a new laptop or phone, the lender will check your score to see if you are likely to keep up with the payments.

There isn't a magic number that you need to achieve to "pass", and in many cases your score will only be used as part of the decision-making process. The other thing to note is that all the organisations that offer credit scores have slightly different systems and scores, so don't be worried if you get one score and your housemate gets another as its possible you have unintentionally used different companies to generate these scores.

Do student loans effect my credit score?

No. Having a student loan will not impact either negatively or positively on your credit score.  Most students take out student finance to fund their studies, with those that don't making up a very small number.   

How about my student overdraft?

No. Your student overdraft will not have a negative impact on your credit score as long as you are careful with it.  Just like student finance, most students will use their overdraft at some point during their course.  The most important thing is to make sure you stay within your agreed limit.

How can I improve my score without taking on any debts?

If you read about credit scores in more detail, you will see articles recommending you take out more credit to show you can manage this and this in turn will improve your overall score.  This isn't very sensible or practical advice for most full-time students. Most students will start university with a low score simply because you are just starting to use credit as opposed to having a low score for being unable to manage it.

Here are some ideas to improve your score that won't cost you any money: -

Register to vote. This is the easiest thing to do and something that can have a major impact on your score. We have included a link about how to do this below.

Pay your bills on time. If you have any regular bills, then ideally set up Direct Debits to pay them on the right date each month.  This means you won't forget to pay them (which is easily done) and you will still have full control of the payments as you are covered by the Direct Debit Guarantee should anything go wrong.

Check your credit report. This is not the same as your credit score, this is a written report about credit that you have taken out in the past but will also include information that lenders may associate with you, such as people living at your address with similar names.  This can sometimes be an issue for those living in shared student housing. We have included information on how to check yours in the links below. However, do not be tempted to sign up for monthly/regular subscriptions that you don't necessarily need as you will be charged for these.

Close any unused bank accounts.  If you have any bank accounts that you don't use anymore, think about closing them or, better still, start using them to save small amounts for specific events such as a holiday, graduation etc.

Never allow anyone to use your bank account. This scam, called money mules,  has increased significantly in recent times. If someone asks can they deposit money into your account as their account has been frozen or they have lost their cards etc. politely say no. To be clear, we are not talking about your Mum sending you money for your shopping or your flatmate paying half of a bill, but someone you don't really know wanting to pay money into your bank should send a warning flag. If you are not sure what to do, then stall for time by saying you can't remember your details and get some advice from your university.

All universities have staff to help you with your studies including your money.  If you need any help or advice about anything in this article or any other aspect of your money, then talk to someone in your university about it. We have also included some trusted links below.


Electoral Commission
Check if you are registered to vote already and advice about registering at two addresses

Save the Student
Has a guide on credit scores aimed specifically at students

Money Saving Expert
Has a very comprehensive article about credit scores and how to improve yours

Money Helper
Information about money mules and where to go for help

Money Helper
Information on how to check your credit report

Money Saving Expert
Read guide to all things about student money here

By Lynne Condell - Student Money Advice Specialist

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