Managing expenses as a student is challenging. You may be used to paying for rent, utilities, examination fees, stationery, extracurriculars, etc. It may exhaust you until you complete your graduation. It is especially true if you sustain a lifestyle on a low income. However, your expectations from life and goals rise after graduation.

It grants you a moment to re-think about career options and employment. This is the golden period to bring your finances back on track. It is high time to repair the damaged credit score. Your graduation lifestyle may make it challenging for you. However, after graduation, your liabilities reduce slightly. It may increase your credit score for a while.

Identify the best ways to repair credit history. You can do that by taking a credit builder loan. Alternatively, drop off from the joint accounts that you might have as a graduate. You don’t need one generally after graduation. It is because you have a regular job.

The blog lists the strategies to build credit scores after graduation. It will help you leverage financial products cheaply. Whether you are a graduate or about to complete your graduation, this blog may help.

5 Strategies to improve credit rating after graduation

Generally, as a new college student, you get overwhelmed with managing finances. However, taking money for 3 years gets you some experience. You get familiar with the good and bad expenses and save accordingly. Similarly, you may know the best ways to increase your credit rating but, struggle to improve one. It could be due to a lack of discipline or following the technique. Here are the best strategies to improve credit after graduation:

1) Have a personal bank account

Your college days are nearly over. So, you can try your best to have a personal savings account. One should generally have one at the age of 18. However, if you use a joint account with the guardians for expenses, let it be. Have a separate bank account and use it for usual expenses.

You can pay utility bills, rent, and credit card payments using the account. You can use it and receive a salary in the respective account. Having a personal account and using it for paying bills and transactions helps build credit history. It is the beginning deal towards having a great credit score.

2) Clear credit card defaults

Defaulting on a loan or credit card payment provokes the company to act against it. It issues a courtly order or a CCJ if you don’t respond to the pending payment warnings. This impacts your credit score drastically and last on your credit report for 6 years. It is despite clearing the pending payments. It just reveals the paid status on the credit report for the other creditors to consider.

Repairing credit scores requires you to set some cash safe. However, untimely moments like urgent cash needs affect savings. What if you need cash despite CCJ default?

You may get a loan despite this status. Explore CCJ loans within your area. Yes, you may get a specific amount if not the desired one. You can use it to tackle the emergency. However, you must pay these alongside the pending credit card payments.

Paying off the credit card dues within 6 years helps you relieve the impact. Moreover, after 6 years, your credit score improves. However, it is your responsibility to ensure responsible take towards financial management.

• Check and pay pending rent (if any)

Most students struggle to pay the rent given the multiple liabilities. Sometimes, unexpected expenses affect the budget. Moreover, the challenges in budgeting enough or overcoming poor financial habits hit finances. Most individuals skip rent to meet other requirements peacefully. However, you cannot do it for long. You must repay the dues now or then.

Otherwise, it may provoke an eviction from the landlord’s side. Check how much amount do you owe and how much you can arrange. Can you negotiate the rental dues with the landlord? Yes, it may reduce the cash burden that you must pay. You may try this technique if you share a good bond with one.

Set up a different separate account to save enough for the rent. It helps you concentrate on a single saving purpose for the time being.

4) Limit dependency on overdrafts

80% of students depend on overdrafts, credit cards, and short-term finance facilities for needs. However, credit cards and overdrafts affect the credit score progress. It prevents you from achieving the desirable credit score. Thus, you must restrain the usage. Check when you use the credit cards the most.

It may reveal possibilities like- utility payments, groceries, or buying a high-ticket item. Halt here. Compare how much you spend with a credit card on a particular item with that of a small loan. You can see the difference. You spend more with a credit card than a quick loan. Thus, whether you need quick cash for an emergency or a small need, check other options.

Individuals with no credit history or score may get extremely bad credit loans in the UK marketplace. You may qualify by providing valid earning evidence as an affordability proof. The loan helps you split the cost of the purchase into easy and personalised monthly instalments. Regular payments on the loan improve the credit reliability and credit score. You can also set direct debits for consistent payments.

5) Take up a credit builder loan

If you want to buy a car or home by the time you turn 23 or 25, it may help. A credit builder loan helps a student without a credit history or score build one from scratch. It involves depositing a specific amount every month to a bank account. It is generally a savings account that you use for the period. Paying a fixed amount consistently for a year or two helps build a credit score.

Lastly, you get the amount that you deposited in the bank account for the purpose. It also involves the benefit from the saving interest that you get. What could be better than getting a higher amount back with a high credit score?

A good credit score may help you seek favourable rates on mortgage or car loans. You may not be required to provide a huge deposit or get a guarantor then. Instead, you can qualify easily and manage payments independently.

Bottom line

These are some ways to build your credit score after graduation. Put your credit rating goals against your life aims. It will help you prioritize them and set credit rating milestones accordingly. Pay the previous pending bills and clear your CCJs (if any). Identify the best possibilities to increase your income and reduce expenses. It is a basic fact to improve your credit rating.