About your Credit Rating: Check and Improve
There is a lot of confusion surrounding credit ratings, especially for students. Rumours are commonly banded around about “blacklists” and student loans being included in your credit rating.
This simple guide is here to tell you why your credit rating matters and how it could affect you during university. Plus we can help you to check your credit score for free and look at ways to improve it as a student.
Jump to a section:
- What is a credit rating?
- How is your credit rating calculated?
- Check your credit rating for free!
- How to improve your credit rating.
What is a credit rating?
In simple terms, a credit rating is a grading system used by banks and lenders when you are applying for a bank account, credit card, overdraft, mortgage and other financial products.
The most common instance when a student will need to check their credit rating is when looking to open a student bank account or increase the interest-free overdraft on your account.
It can be well worthwhile building up your credit score whilst at university as you will inevitably look to take out a mortgage or credit card in the future.
Although it is a common myth, there is no credit score blacklist and your credit record is not held on a single database. Your records are held by 3 major credit companies: Callcredit, Experian & Equifax.
Your credit rating is just one factor in a bank’s decision. Every bank or lender will couple your rating with data of their own, for example, from the application form or internal credit history. Whilst there are lots of factors involved, you can help yourself by taking care of your credit rating.
How do they calculate your credit rating?
Nobody is sure of the exact calculation used to get your credit rating and the agencies all use different factors when ranking you. This is why it’s best to check with all three (see below).
However, we can be sure of which factors are taken into account and which definitely aren’t:
They will check
- Past bank dealings
- Utility payments
- Mobile phone contract payments
- Credit card history
- Loan history
- and building society history
They won’t check
- Student loans – Contrary to some people’s belief your student loan is not taken into account for our credit score. It is a safe way to borrow money and is treated as more of a tax.
- Parking fines
- Whether you have checked your credit rating
- Salary (although the bank will check this)
- Criminal records
Utility companies such as BT and British Gas share their data with credit companies who then make a score based on all of your previous records.
3 places to check your credit rating for free
If you are concerned about your credit score or are curious, then it is possible to check your records with all 3 major credit agencies for free on a trial basis.
But! It’s important that you cancel any free trials before payments are taken for your subscription.
The credit report agencies tend to offer a free trial of a few weeks when you sign up. Once you have received your free credit report go right ahead and cancel your subscription with them. Use the links below to check your credit rating, we have ordered them roughly in order of importance and ease of cancellation.
Credit Reports Matter
You can check your Callcredit score through creditreportsmatter.co.uk for free on a 10 day trial. If you do not cancel then you will be charged £14.99 a month thereafter. You can cancel online via your account settings as soon as you get your credit report.
Remember that each different company will grade your score differently and that it is best to check all three in order to get a good overview of your situation.
Checking your Experian credit score with Credit Expert is also recommended. You can sign up for a 30 day free trial, and again just remember to cancel to avoid the £14.99 a month subscription thereafter (unless you actually want it).
To cancel simply call the free phone number 0800 561 0083 as soon as you have checked your score and report.
The Equifax free trial is 30 days long and the charge is £6.99 after this. They will charge a £1 card check but if you cancel in time this will not be credited to your account.
To cancel call 0844 335 0550 with your reference number at hand.
5 ways to improve your credit rating?
After checking your credit reports (see above) you be worried about the score you’ve been awarded. You can do something about it!
Make sure that everything is correct
If you do not agree with something in any of your credit checks then you will need to make sure that it’s changed. You can do this by calling up the credit company themselves and asking if they will look into it. They may require you to contact the company that has given them the wrong data (eg. your mobile phone company) in order to amend it.
Get a credit card, then cut it up
You can improve your credit rating just by taking out a credit card and cutting it up. This works because, whilst you have been offered credit (money) you are free to spend, you have displayed financial discipline and moreover don’t owe any money to the bank. For more details on credit cards read our full guide on credit cards for students.
Our top pick right now is the Halifax All in One card because it offers 0% on purchases for 15 months. In other words, you have a healthy 15 months to repay any money borrowed from the date of purchase. I’d suggest cutting it up, but the generous interest-free repayment period is a good safety-net.
I applied for this credit card in my second year with the sole purpose of improving my credit rating. I have not paid a penny of interest on it. Find out more here.
Pay all bills on time
The simplest way to improve your credit score is simply to make sure that you pay all of your bills on time. That includes utility bills, mobile phone contracts, rent and any form of loan repayments.
Get on the electoral role
If you aren’t on the electoral role then you won’t have a credit score at all. A lot of students fall foul to this one because after moving from home many don’t register with a new address.
If you are unsure how to do this then check and register on the About My vote website.
Space out applications
A lot of credit agencies will check the times that you have applied for things. As a student you may have to apply for lots of things all in one go but make sure you can spread out your applications for any extra finance and only apply if you really need to. If you are denied credit at any point, wait at least 30 days before making a reapplication.