Credit Score was one of those terms that I learnt about but never paid attention to until recently. I never understood why grown-ups kept harping on maintaining the credit score, until I was looking to borrow money. Here’s what I think, we tend to ignore the concept of credit when we are students. Once we surpass that stage of our life, loans, some may say, are inevitable. So it is not a bad thing to think about how you can look at improving or maintaining your Credit Score even whilst studying.
What is a Credit Score?
Before we go any further, I think it is important understand and clear any misunderstandings about Credit Score.
In simple, Credit Score is a numerical figure that represents your reliability in terms of borrower. It looks at your financial history and summarises it into one figure that screams if your credit worthy.
You can use site like getcreditscore.com.au to get your Credit Score free of charge. They connect directly to Equifax, Australia’s leading credit bureau, to identify you. You are required to provide personal details along with your Australian driver’s license. If you do not have a driver’s licence, you can get a free credit report from Equifax.
Importance of Credit Score
Credit Score isn’t a one time deal, it follows you through your entire life. Definitely don’t take it for granted. I am sure this applies to many countries, in Australia, Credit Score is everything.
Once you leave behind the student life and start your professional career, you will realize your Credit Score will appear in various aspects of your life. Credit Score will enhance your borrowing capacity with banks and financial institutes for luxury purchases. Your Credit Score will also add value to your renting history to rent a property of choice. Now a days, vendors including insurance companies, energy retailers, seek your credit history prior to contracting services.
It goes without saying that, a bad credit score can be disasterous. Not having neutral credit score may not be that great too.
How to build Credit Score while in Uni?
For starters, repaying any student loans whilst in University is a smart decision. Student loans, in most cases, are not required to be paid off until you graduate and earn above a certain threshold. However, you can get ahead of the game and start making smaller and consistent contributions towards your student loan.
Make sure you pay your rent on time! Whether you are residing in on or off campus accomodation, ensure you request for a transaction log from your landlords / real estate agents. Whilst you can not directly report rent payments to credit bureaus, your landlord / real estate agent may be registered with special credit services that accepts rent reports which will in turn be added to your credit record. This is a great way to use paying bills to your advantage, but at the same time finding landlords / agents who are registered for such services is not easy.
Get yourself a credit card. Credit cards have bad conotations, especially amongst students. If you are not adult enough to responsibily manage a credit card, how can you expect lenders to have trust in you? If you are serious about building the credit score, walk to a bank and sign up for a credit card. It is a very simple process, even for International Students. Simply make sure you pay for the relevant transactions at the end of the month without delays.
I would love to hear your thoughts on Credit Score. Is this something you thought about while being a student? How did you build your Credit Score while in University?