Many students starting university after A-level results remain unaware that paying rent or bills alone does not necessarily help establish a credit history, potentially affecting their future borrowing ability.
Students heading into university after A-level results day are being urged to understand a financial reality that often catches freshers out: simply paying rent or sharing bills does not necessarily build a credit history. Compare the Market says more than half of students, 52%, did not realise that bills-included rent usually does not help a credit file because the utility accounts are often in a landlord’s name rather than the tenant’s. The same research found 83% were unclear about how student loans affect credit scores, with 27% wrongly assuming they are treated like credit card debt. In fact, student loans are not reported on credit files, according to MoneySavingExpert.
That misunderstanding matters because credit records can affect everything from mobile phone contracts to later borrowing. NerdWallet says student loans do not sit on a credit file in the same way as mainstream borrowing, while missed repayments on actual credit products can still do damage. Compare the Market’s personal finance expert, Sajni Shah, said students often assume that managing rent and day-to-day outgoings automatically strengthens their credit profile, when that is not always the case.
The practical advice is simple. Shah recommends keeping at least one small regular bill in your own name, registering on the electoral roll, staying within an overdraft limit and avoiding a flurry of credit applications in a short period. Paying on time also matters, because missed payments on things such as a phone bill can be recorded and hurt a score. LegalClarity and Self both note that utility bills usually do not boost credit by themselves unless a consumer has signed up for a third-party reporting service, although missed accounts can still cause problems if they are escalated to collections.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
