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It's never too early to think about your finances, especially as you're starting to manage your finances independently for the first time.

Most students will borrow money as they begin their first year at university, whether it’s an overdraft on their student account or a credit card.

The easy availability of credit is good news for many, as maintenance loans often do not cover all the big expenses which come with independent life, such as a house deposit or expensive textbooks.

However, whilst taking out credit in itself is not bad, they have to make sure that they can manage their borrowing and that they understand exactly how it works. Whilst in first year the free overdraft might seem like ‘free money’, it never is, and it will have to be paid back eventually. In reality, it’s borrowing money from the graduate self in a few years’ time.

The first step to managing credit responsibly, is to understand exactly what you’re signing up for. Don’t simply look at the attractive introductory offers such as a free Railcard, but instead focus on the small print. What are the terms of your overdraft? Check the interest rates, any penalties for exceeding the overdraft and how long it lasts after you have graduated.

Secondly, do not be tempted to take on credit beyond what you know you will be able to afford. It’s good to look at average graduate salary prospects and to think about how debt might affect you in the future.

Managing your borrowings does not have to be complicated. If you’re using overdraft, don’t exceed your limit as you will most likely be penalised. If you’re using a credit card, make sure to make at least minimum payments each month, though it’s always better to try and pay the debt off in full as soon as you are able to. This will save you spending money on interest rates.

Finally, any damage that happens to your credit rating during your student years, does not simply go away the day you graduate. Considering your financial situation every once in a while whilst at university, might save you a lot of stress later on. Whilst access to credit is important for ‘freshers’, it’s equally vital when you are about to start your independent life without the safety net of a student loan.

Here’s a checklist of what to remember when looking after your credit score:

  1. Understand the exact terms of your overdraft/credit card. What are the fees, penalties, and how long does your overdraft last?
  2. Don’t overuse credit as you might end up with debts that you cannot afford to pay back.
  3. Always make at least the minimum payments, to avoid damaging your credit score.
  4. Remember that you will have to pay back your overdraft once you have graduated.