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How can graduates and first jobbers boost their credit score?

Written by: Emma Lunn
Defaqto is urging school leavers and graduates to only spend what they can afford and never miss a monthly payment on a financial product in order to maintain a healthy credit score.

The financial information business says a decent credit score is necessary if people want to access the best deals on banking and other financial services.

With the current average graduate starting salary sitting at £23,000 and students often graduating with debts of more than £50,000, it’s likely many first jobbers will need some extra financial support when they first start out.

Being able to access the best deals on loans, bank accounts, overdrafts, credit cards and phone contracts can all help. Those who have better credit scores are more likely to be offered the best deals and cheaper credit than those with a poor credit score or no credit score.

Katie Brain, insight analyst at Defaqto, said: “When you take your first job, perhaps after university or school, it is important to consider your future credit rating, particularly if you need to borrow money to pay for a car or a season ticket to commute to work, for example. Providers will only lend money to those who are identified as creditworthy, so they will want to see evidence that potential customers can be trusted with money.

“Graduates should aim to build up a record of good borrowing and repayments. This means having access to credit you don’t use, such as an overdraft, to demonstrate personal discipline; always paying on time, so that lenders can see that they will get their money back; and never paying just the minimum monthly amounts, to prove that you’re financially healthy.

“Graduates and first jobbers who follow these simple steps will boost their credit score, increase their desirability as a customer, and get access to some of the better deals on the market.”

Top tips for improving your credit score

  • Always register to vote at the address where you live.
  • Opt for a monthly mobile phone contract, such as a low-cost SIM-only deal, rather than a pay-as-you-go. Make sure the contract is in your name and registered to your address.
  • If you have a current account, apply for a small overdraft facility and use it sparingly. You might not think of it as a loan, but lenders will look at your overdraft history.
  • Apply for a credit card and spend small amounts only on it every month. Make sure you clear the balance every month.
  • Don’t spend up to anywhere near your credit limit, unless you pay the entire card off in full that month. Having access to credit but not using it all shows you have discipline.
  • Never miss a monthly payment on a credit product, even if you only make the minimum payment.

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