Household Bills And Your Credit Record
You might be surprised to know that even if you haven’t borrowed money during your studies you may still have a credit record.
A credit record may exist on your name if you opened a student overdraft account or credit card when you started university. Even though your account may never have been in overdraft, the bank would report the credit limit offered to you and the overdraft/credit card usage.
A credit record entry may also appear if you had a telephone contract where you paid for your brand-new shiny phone over the period of the contract, or you purchased any item that you paid for in instalments (yes, even those with a 0% APR).
If during your studies you rented a flat or house with your fellow students – a number of household bills could be in your name and the utilities also report if you paid your bills on time to the credit record agencies.
Build your credit record
Paying all of the above items as they come due is a great way to build your credit record without borrowing money. It shows to any potential lender that you may apply to in the future for credit, that you can handle bills and payments as they are due and that you can be responsible with them lending you money.
At Lendwise we have on occasion come across student credit records that are otherwise stellar in repayment behaviour but show arrears or defaults on household bills. When asked for more information on this, the students sometimes have no clue of such an arrear or default. They moved out of their accommodation when the university year ended, a bill arrived in the post a few weeks or months later and as it was never dealt with – arrears or even worse a default was recorded.
A default – even if later satisfied – leaves a black mark on a credit record. It stays there for six years and can have severe repercussions on your ability to borrow money in the future.
What can you do to avoid this?
- Pay your bills through direct debit ✔
- Check your credit record often. All credit record agencies and a number of aggregators have free services where you can sign up to view your credit report ✔
- Before you return the keys to your landlord – call the utilities and close your account. This way you will also protect yourself from unauthorised charges after you leave the property for the final time.