Studying Abroad? Here’s How to Manage Loans and Protect Your Credit Score

If you’re planning on studying abroad and want to maintain a good financial position, it’s really important to manage your credit and your credit score responsibly. Building up a good credit score and keeping it healthy can help you stay in a good financial position when you’re studying overseas. It helps in future large financial commitments after completion of your studies such as qualifying for lower interest rates on loans for major purchases like a house or car.

How to build a good credit score before and during study abroad

One of the first things you could do if you want to maintain a good credit history whilst you’re studying abroad is to apply for a credit card from an international bank. Most credit cards are accepted around the world and don’t usually come with many transaction fees. They also offer fraud protection. You may also need to open a new bank account. This can be particularly simple if the bank you use back home also operates in the country that you’ll be studying in.

Pay your bills on time

Once you have opened your new bank account, you can set up direct debits for your monthly outgoings. This means your bills will be paid automatically and on time whilst you’re studying as long as you have sufficient funds in your account. It also shows potential lenders that you are likely to make future payments on time.

Budgeting whilst studying abroad

Create a comprehensive budget that covers your living expenses, utility bills and other costs so you can keep track of your spending whilst you’re preparing for tests and studying abroad. Your circumstances could change from one month to the next, so it’s really important to update this. You may find that you have less time for part-time work when you’re in a particularly intensive part of your studies such as test prep, which could put a strain on your finances.

Keep track of your credit score

Many people are surprised when they check their credit score for the first time in a while. Your score could be better than you think it is, or it could be lower than you expect. If you think there is something unfairly affecting your credit score, like an error or a payment that’s wrongly been reported as missed, get in touch with the credit referencing bureau or the lender to get it fixed. Errors on credit reports can bring your credit score down significantly and make it harder for you to get credit when you need it. You also need to check your credit report regularly to make sure you’ve not been a victim of fraud, with criminals using your identity to illegally borrow money.

Maintain a good credit score

If you do have a good credit score, it’s important to do all that you can to maintain it. If you have a less-than-great score, you’ll need to do things to improve it if you want to access credit after your studies have ended. Try to pay off as much existing debt as you can and avoid making any unnecessary applications for credit. Many credit applications involve hard checks, which can bring your credit score down by several points. Don’t make too many applications for credit in a short space of time as this can send bad signals to potential lenders.

Will a high credit score help me get better terms on loans?

People with high credit scores have a better chance of securing loans with favorable terms and low interest rates. You’re likely to have fewer options if you have a bad credit score and may have to accept higher interest rates if you’re able to get a loan at all.

Can I get any Government funding for overseas study?

The UK used to participate in the Erasmus + scheme. After the country’s exit from the European Union, around 40,000 students are receiving funding for study and work placements around the world through the Turing Scheme. Schools, colleges and universities in the UK are able to apply for this funding, which they can use to pay for students to study and work abroad. The amount you could receive will be based on factors like where you are studying and how long you are going for. You might receive more support if you are from a disadvantaged background or have special education needs or a disability. Tuition fees are normally waived by universities as part of this scheme, so you shouldn’t need to worry about paying them.

Find out if any extra help is available

If you do face a financial struggle whilst you’re preparing for tests and studying abroad, find out if any extra help is available. Your funding options can change at any point, so it’s very important to keep yourself up to date with what your options are at the moment. Some of the organizations you could speak to include UKAS, Student Finance England, Student Finance Wales, Student Finance Northern Ireland, the Student Awards Agency for Scotland or the international office at your university.

You could be eligible to take out a maintenance loan. This can help you cover the cost of living whilst you’re studying in another country. You might also be able to apply for a private scholarship or grant to help with funding your studies. A part-time job can also help you stay in a good financial position during overseas study, but make sure you’re permitted to work in the country first to avoid legal trouble. Working lots of hours can also make it tougher for you to focus on your studies and affect your results.

You may also be able to arrange an overdraft with your bank to support you during your studies, but you’ll need to avoid ‘maxing’ it out or going over your limit as the penalties for doing this can be severe and result in unmanageable debt. This can help you make sure you’ve still got access to funds when you need them the most.

The right approach

Maintaining a good credit score, accessing loans and keeping on top of your repayments during test prep and study abroad can be challenging, but making the right decisions and applying for the financial support that you’re entitled to can make everything run much more smoothly. Keeping a good credit score and managing any loans carefully during your studies to make things easier for yourself once you leave university and you’re ready for full-time work.


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