4 Steps To Improve Your Credit Score

A good credit score is very important if you are planning on buying a house at some point in the future! They show lenders that you are a reliable candidate to lend money to. The better your score the better interest rates you could get.

You may think this is something you don’t need to worry about as a student, but this is the perfect time to start building it up! This post will run through four steps you could take as a student to improve your credit score.

#1 Register to vote

This is the easiest place to get started! The minute you earn 18 you need to register to vote! Not only is registering to vote important so you get your say in elections, but it will also boost your credit score.

Registering to vote will increase your credit score because it shows you are an invested member of society and settled in one area. It doesn’t matter if you register at home or at uni so long as you register!

I got rejected from my original application for a student overdraft but a year later I was accepted for a student credit card. The only difference – I had registered to vote.

#2 Get a credit card

Most student accounts will also offer a student credit card – apply for this! The best way to increase your credit score is to take out credit and prove you are a reliable client. This means spending on a credit card as if it’s a debit card – NEVER spend more money than you already have!

RELATED READING: Personal Finance 101

#3 Don’t spend more than 8% of your limit

Credit utilisation is a measurement of how much credit is available to you compared to how much you use.

For example: You have a £500 credit limit, and you spend £400 a month – in this case your credit utilisation would be 80% – that’s very high.

Your score may suffer if you have a high credit utilisation! Experts suggest that 8% is the sweet spot. So back to our example – 8% of £500 = £40. This means you should aim to spend around £40 on your card each month.

#4 Pay your balance off in full EVERY SINGLE MONTH

This is SO important! Credit cards are a powerful financial tool, but they also come with the danger of getting into financial trouble. Please do not get a credit card if you know you will overspend!

To improve your score, you have to pay off your balance in full every single month! Back to what I said earlier, you should treat your credit card like a debit card – meaning you only spend money that you already have.

I manage mine by keeping a separate pot money ready to pay my bill. Every time I spend on my credit card, I transfer the exact amount into this separate pot. In my mind, this money is already spent. Then when it’s time to pay your bill, you will have the money ready to go.

That’s four steps to increase your credit score as a student! Do you know your credit score? Are you trying to increase it? I’d love to know!