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| Five ways to stop student debt taking your dream job away | |
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When you’re a student, life is for living, money is for spending and worrying about your potential career is for the birds, right? Wrong. The choices you make now will shape your working life for years to come – and that includes your financial decisions as well as your educational ones. Even if you haven’t got a credit card or taken out a bank loan, you will have a bank account and you will have a credit report. This is your personal credit CV and shows debt you have taken on – apart from loans with the Student Loans Company, which are not included – along with your repayment history. Lenders check it when you make an application, because it tells them how well you are coping with your current commitments and whether you make payments on time and in full. Many landlords and prospective employers will ask your permission to check your credit report, because they want to know if you have got into any financial difficulties in the past – performing a credit check is one of the quickest and easiest ways of finding out. Bad debts that result in a court judgment, individual voluntary arrangement (IVA) or bankruptcy are recorded on your credit report for six years and can affect your prospects for even longer. Did you know, for example, that bankrupts are prohibited from working in the financial sector, armed forces and police, cannot become MPs or hold certain other public roles and may not act as trustees of a charity or a pension fund? Undischarged bankrupts can’t be company directors either, which is bad news for would-be entrepreneurs. And you don’t have to be declared bankrupt to find doors closing in your face – if you’ve had any serious problems with debt you are unlikely to be offered a position that involves handling money – which rules out jobs in banking and financial services – or requires a high level of trust, such as work in public services. You will probably have to find a guarantor to back you if you want to take on a new tenancy agreement. However tight money is now, though, it need not become a career-threatening issue. By taking action to make sure your finances are in good shape – and stay that way – you can distance yourself from the difficulties associated with bad debt. Start by checking out these five basic tips. Get to know your credit report There may not be much to it now, but your credit report can be your passport to getting the best deals and making a good first impression with lenders. So it makes sense to know what’s on it and ensure that all your details are accurate and up to date. You can take advantage of a free trial of an online service, such as CreditExpert. It’s the UK’s market leader and allows you to see your Experian credit report as often as you like. Don’t overstretch yourself However tempting it is to live for today and pay for it all tomorrow on credit, always think carefully before signing on the dotted line. Work out how you are going to fund your borrowing and don’t rely on vague hopes of windfalls or a generous starting salary to cover the repayments. Your chances of winning the lottery are around 14 million to one, while the average graduate starting salary is around £24,000. By the time you’ve paid tax, NI, the deductions for your student loan, rent, transport and food, there won’t be a lot left over to clear other debts. Pay up promptly Always pay your bills on time and never skip a month, however tight your finances. Missed and late payments stay on your credit report for at least 36 months and will make a bad impression with other potential lenders. Act quickly - don’t let things slide If you are starting to feel out of your depth financially, talk to someone straight away. Your bank or lender should be your first point of contact – you may be able to arrange more suitable terms or take a repayment holiday. A number of organisations also provide free advice, including Citizens Advice (www.citizensadvice.org.uk), National Debtline (www.nationaldebtline.co.uk). Your student union should also be able to help. Be honest Trying to brush a bad credit history under the carpet will only make things worse when it eventually comes out, so come clean about any problems you’ve had in the past. Even if you temporarily lost control of your finances – and what student doesn’t get into debt? – people will appreciate your honesty and the fact that you’ve done something about it. |
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