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How University Graduates Should Start Building Up Their Credit Score?


One of the biggest issues that university graduates have after they finish their studies is the fact that they do not yet have a credit history that would allow them to get large loans. This is usually a consequence of not using banking services and products. Generally speaking, if lenders do not have enough information to determine if a loan application is profitable or not, they will choose to either reject it or to attach certain limits to the deal.

This having been said, building up one’s credit score cannot be done overnight. The data needs to be collected over time, from as many sources as possible. This means that an individual needs to use banking products and services as early on as possible, to ensure that he will be able to get larger loans when he needs extra financing.

There are several strategies that financial advisors recommend to graduates who want to build up their credit score, however, we will look at the most effective one to date:

  1. Get a Credit Card and Use It from Time to Time

Almost anyone can get a credit card, regardless of his credit score. While the lender may place a lower spending limit on it, getting one of these cards and using it every couple of months for small to medium-sized purchases will slowly increase an individual’s credit score. However, please keep in mind that using it too often or not repaying the money by the end of the month will damage your credit score.

  • Purchase Products and Pay for them in Instalments

When individual purchases and expensive product, pays for it in instalments and makes all the payments on time, the entire process will be recorded in his credit file. Lenders may look at these purchases to determine the repayment habits of a potential borrower. As with the credit card, do not do this too often, especially if you earn enough to pay for the products on the spot.

Do not forget that paying for products in instalments involves also paying interest rate, making them similar to personal loans. Do not buy more than you can afford.

  • Get Small Loans and Repay them on Time

Getting small personal loans to pay for vacations abroad or home improvement projects is a great way to build up your credit score. These loans do not require high credit ratings, they have low-interest rates and are unsecured.

Keep in mind that you should avoid payday advances and microloans as much as possible. These are expensive and will damage your credit score, especially if you use them too often.

  •  Start a Savings Account

Having money in the bank is a good way to show lenders that you can properly manage your income and expenses. It is a good idea to start a savings account as soon as possible and to contribute to it monthly, regardless of how much or how little you deposit.

  •  Get a Debit Card and Use It Regularly

Debit cards are much safer than credit cards and can be used to build a transaction history that lenders may extract information from. Unlike credit cards, you can use debit ones as often as you want, but it is generally recommended to pay with them at least twice per month so that the lenders will see that the accounts attached to them are actively being used.

These five tips can help any individual build up his credit score from scratch, even before graduating. For example, opening a savings account and getting a debit card is extremely affordable and can be done by anyone.