Student loans are a popular option for students across the UK. From budding designers to soon-to-be mathematicians, student finance helps millions of students access higher education without extra pressure.
For many students, this is their first time borrowing money, and some may not know if the finance affects their credit score or future loan eligibility. However, UK student loans are different to other kinds of debt. Keep reading to learn more about this borrowing method before you start your studies.
We have good news for anyone taking out an education loan — it won’t affect your credit score.
Unlike other loans, educational ones aren’t included on credit reports and thus have no effect on your overall score. Even if you have significant loans to pay back, you can still have a good credit rating.
Though student finance leaves your credit score unblemished, it does get considered by mortgage lenders in affordability checks. So, a substantial student loan could impact the process of getting on the property ladder.
However, don’t worry too much about this. Most mortgage lenders accept applicants with outstanding student loans if they meet the specific criteria.
Another common question is whether those with student debt can borrow money via other loans. Though student loans don’t affect your credit rating, they can impact your eligibility for other types of loans.
Some lenders are hesitant to lend to candidates with significant student loan debt. However, this decision is again based on how well you meet the loan criteria. Those who make prompt student loan repayments and have a good credit score will be more likely to be accepted than those who don't meet the requirements and have a blemished repayment history.
Focusing on your credit score shouldn’t be reserved until you have finished higher education. Earlier is always better when it comes to personal finances.
Did you know registering to vote helps your credit score? That’s right; getting on the electoral roll improves your score and makes borrowing money easier.
Credit cards can result in debt, but when used responsibly, they show lenders you are responsible and improve your credit score.
To get started, try using a credit card for small purchases and make the repayments as soon as possible. For example, start buying your daily coffee or food with one and pay it back within the next few days.
“Buy now, pay later” schemes are taking the consumer landscape by storm. But they are not good for credit scores, especially for students on tight budgets.
These “helpful” schemes will impact your credit score if you borrow more than you can afford or make late repayments. To protect your score, it’s best to avoid them and focus on budgeting instead.
Interested in building your personal finance knowledge? Skip to the Polar Credit Info Hub to learn more about loans, credit and credit alternatives.
For more helpful information about how to manage your money, different financial products or what we do at Polar Credit, take a look at our Info Hub.