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When you’re a student, you don’t think about the stuff that could damage your credit score. And even once you’re unleashed into the ‘real world’, it often doesn’t seem a relevant topic at first.
I know that I, personally, have avoided credit cards like the plague, being all too aware of the potential dangers of having a large sum of money that you don’t actually own, but can spend anyway. I naively believed that as long as you stayed away from payday lenders, and other unscrupulous entities, you’d come out the other end with a shiny, perfect credit score. However, there are a number of things that you might not realise can knock it down.
That moving property can negatively affect your credit score seems indirectly discriminatory, given the housing crisis that our country currently faces. It’s also well documented that my generation, the ‘millennials’ are frequently labelled ‘generation rent’, for the difficulty that we face getting onto the housing ladder.
The irony is that you need a good credit rating to obtain a mortgage and move somewhere permanently anyway!
Mobile phone contracts
This may seem like a no-brainer, but missing a payment on your mobile phone contract can also wreak havoc on your credit rating. Mobile phone companies, in particular, can be very ruthless when it comes to informing the credit agencies of a late payment, even if it’s your first time, so be careful!
I’ve been fortunate enough that this has only happened to me once, when I had my purse stolen and all my cards cancelled. However, I made sure to call my carrier, O2, straight away. Thankfully, they were very understanding as I’d let them know, and agreed to put a hold on my payment until I’d managed to sort the situation out. As this was the best part of a decade ago I can’t tell if this had any baring on my 18 year old self’s credit rating, but it goes without saying that honesty is the best policy.
Taking out lots of new credit cards all at once
Of course, lots of borrowing can look suspicious too. It’s never good to be in too much debt, even if you’re sure that you can pay it off. It’s recommended that you keep credit card borrowing below 25% of the total limit.
Unsurprisingly, there are also a number of things that, if you haven’t done them already, can help to boost your score.
Being on the electoral roll
Fulfilling your civic duty to vote can be seen as a great sign that you take your responsibilities seriously.
Keeping old accounts running
Recently, when I was on the phone to an RBS advisor, I decided to quiz him on improvements to credit score. Surprisingly, low income doesn’t affect your credit rating, also fiscal responsibility definitely does. One thing that I’ve definitely done correctly, is keeping my old account running- this includes my mobile phone contract with O2 that I’ve been taking out since I was eighteen years old, and my old Co-op, Nationwide, and RBS bank accounts.
Some people also utilise the technique of taking out a credit card just to pay it off quickly and boost their credit scores. Sometimes our situations are inescapable, but there are always work arounds!
Maddy is a freelance illustrator who lives in Glasgow. She's recently graduated and is working hard to make ends meet. Self-employed? Read Maddy's experiences here.