As a University student you are not only worried about exams, tests or assignments – you are also worried about your future and the next steps you are going to take after graduating. One of the main worries I had as a student was how I was going to qualify for a home loan.

The mistakes many people make in their student years are not saving, spending recklessly and stating that their younger years are for making those mistakes. Yes, it is inevitable to make mistakes but when it comes to your credit record, it catches up with you in the future.

After graduating you get that new job and hope to create a better future for yourself – you start looking at purchasing that new home for example. However, many people will require a home loan to purchase a property. The bank may either approve the amount required or provide a lower amount than what you qualified for.

Besides taking your affordability into account, in order to receive the loan you want, you need to ensure that your credit score is favourable. You are probably wondering how are you suppose to build a credit record while being a student with no job and no time. It is not easy but try and find a part time job where you are able to work over weekends or do promotional work for companies for example. No matter how little you earn, it is still an income and banks allow credit cards for students based on their affordability and income. This is one way to ensure that you have a credit record before you even graduate.

Unfortunately, you have to build credit in order to obtain credit. It is a crazy concept I know, but to explain this further, if you have no credit then there is no record. This means that financial providers do not have an understanding in respect of your credit habits and will regard you as a high-risk client. Therefore, it is usually suggested to have some form of credit by obtaining a credit card, cell phone contract or clothing account.

Even though your credit score is important, your credit history is even more important. The reason for that is because it has a bearing on whether or not you will be approved for your home loan, the interest rate you will qualify for and whether or not you are a high or low risk client. The goal is to be a low-risk client in order to receive favourable interest rates and to be approved for the full loan amount you hoped for.

TIPS TO CONSIDER:

• Do not be reckless and ensure that you pay your debt on time by sticking to a strict budget.
• Ensure that you do not spend more than 50% of the credit provided to you and work with your financial means.
• Do not apply for numerous loans in a short period of time as this may raise red flags that you are unable to maintain your payments.
• Ensure that your credit record is clean for at least 6 months before applying for a new loan or for more credit.
• There are various applications which can be downloaded on your phone to ensure that you stick to your budget and also check your credit score. Please ensure that the application is reputable. Contact your bank for more information if you are still unsure.
• Ensure that your information on your credit record is up to date.

The bank is looking for security and you need to prove that you as the client can provide such security. The best way to prove that, is to ensure that you are a low-risk client with a good credit record. If you are unsure and do not know where to start, contact your bank or a financial adviser for the best possible advice.