5 Great Practices to Build Up Your Credit Score after Graduating from University

Lenders are constantly working to make it easier for individuals to access their services. From personal loans to lines of credit, borrowing money is now easier than ever. However, regardless of the type of banking service that an individual may want, a high credit rating is still required. Unfortunately, there is no way to quickly increase this rating by a large margin. Instead, it needs to be built up over time. This is usually easy to do since most individuals tend to get personal loans to buy smart devices, household appliances, new automobiles, and other expensive products. In other words, most individuals build up their credit score passively, by accessing banking services for their day-to-day expenses.

This having been said, all individuals must start from somewhere and the ones that usually have the lowest credit ratings are university graduates. The reason behind this is the fact that they did not have time to access banking services and, as a result, they do not have a financial record that is large enough for lenders to evaluate. Luckily, this issue can be avoided through 5 simple actions that cost very little and offer short-term benefits as well as in the long run.

  1. Get a Debit Card and Use It as Often as Possible

While using credit cards to often can be both expensive as well as lead to a lower credit rating, debit cards function differently.  Getting a debit card, depositing money in its account regularly and using it to purchase products can both increase your credit rating as well as give you access to discounts that various stores may have to offer.

  • Start Repaying Your Student Loan

Some lenders will allow individuals to start repaying their student loans even before finishing university. While taking out a loan does not necessarily affect one’s credit rating, starting to repay it and doing so consistently will be beneficial. This is because lenders will see that an individual is eager to repay the money and can properly manage his finances.

  • Buy Relatively Affordable Products in Instalments (Through Personal Loans)

Instalment loans are not available only for highly expensive products, which means that they can be a great way to increase an individual’s credit rating. Consider using this type of loan for products that have a price tag between £1000 and £2000. This should keep the interest rates low and make the debt affordable, but will also show lenders that you are capable of properly using banking services.

  • Get a Credit Card and Use It Only Once Every Couple of Months

Using a credit card too often is a sure way to lower your credit rating, however, not using it at all may still have a negative impact. Lenders regularly look at how much credit an individual has access to, especially if it is never used. From their perspective, if an individual has a credit card that he does not use, it means that the lender has money locked into an agreement that is not profitable in any way. This having been said, getting a credit card and only using it ever 5-6 months, for small purchases can give your credit score a slight boost, by showing lenders that you use the credit that is made available to you.

  • Open a Savings Account

There is no lower limit to the amount of money that individuals can deposit in their savings accounts, however, having one can increase one’s credit score by a considerable amount. This is because it shows lenders that individuals are making an effort to put money aside for emergencies or large expenses. It is possible (and recommended) to open a savings account during the first year of university and to deposit as little or as much as you want. The amount is not relevant as long as you are consistent. Depositing a small amount of money every week or month can increase an individual’s credit score by a large amount.

Author: Chris

I’ve always been fascinated by how easy some individuals seem to earn a fortune without breaking a sweat. While I do not have any formal financial training, I have had the opportunity to apply for a wide variety of loans and lines of credit. I've also tried out several personal finance budgeting methods to discover which ones would allow me to repay the money faster. Some of my experiences were horrible, however, others have proven to be very insightful. Over time, I’ve discarded the methods that didn’t work and have optimized the ones that did. Now, I’m hoping to help others learn from my mistakes and make better financial decisions than I did.

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