As the academic year gets underway, many young people will be heading off to university, in a year that saw the second highest number of UCAS applications on record.
For many that includes managing their own budget for the first time and understanding credit information is a key part of that.
Whether it’s getting a new mobile phone contract or applying for a credit card, having a good credit score can help you get the best interest rates. Recent research by leading UK credit reference agency TransUnion showed that Gen Z are savvy about this, with seven in 10 (70%) young people aged 18 to 24 checking their credit score at least once a month. However, many are unaware of crucial credit-related facts as they embark on university life.
James Robinson, TransUnion’s managing director of consumer interactive in the UK, said: “Over a quarter (26%) of students have had trouble paying rent or bills, according to our research, so it’s really important they understand their credit report and score and how it works – and realise the impact that a missed payment can have. It’s very positive to see the number of Gen Z that are checking their credit score frequently but there are still a few misconceptions.”
TransUnion’s research uncovered that among this age group, 57% don’t realise that late or missed payments can have a negative impact on their credit score.
Nearly two thirds (64%) don’t know that making lots of applications for finance over a short time period could weaken their credit score.
Less than a third (32%) are aware that using a high proportion of available credit can negatively affect their credit score and the majority (71%) don’t realise that being on the electoral register helps to strengthen credit scores.
25% mistakenly believe that student loans are recorded in their credit report and 62% don’t realise that checking their credit report regularly can help protect them from potential fraud.
Robinson said, “Credit reports are also used for identity checks to help prevent fraud and if someone tries to use your identity in a scam, your credit report may be the first place you’ll spot it. Under 21s are often a target for fraudsters so it’s essential they’re able to recognise some of the warning signs and can spot suspicious activity to try and prevent it.”