Top Tips for Students Using Credit for the First Time
With thousands of students heading to university this month, many may be opening bank accounts, taking on overdrafts or applying for credit cards for the first time. And Gen Z is already feeling financial pressure, according to new TransUnion data.
Research from TransUnion’s Q3 2025 Consumer Pulse survey shows that while the overwhelming majority (95%) of Gen Z believes that access to credit is important, many may already be feeling the strain of day-to-day financial commitments. Nearly four in 10 (38%) reported cutting back on discretionary spending, including dining out and entertainment, in the last three months.
When looking ahead, almost half of all UK consumers (47%) expect to spend more on essentials such as bills, utilities and credit repayments. Research suggests that Gen Z may also be the most concerned about future financial security as almost a quarter (23%) had saved more in emergency funds in the past three months.
James Robinson, TransUnion’s managing director of consumer interactive in the UK, said: “Younger generations can often be the most vulnerable as they begin to navigate the financial landscape. Becoming financially independent and taking on the responsibility of everyday expenditures for the first time can be overwhelming and confusing to many. This is why it is important for students, and young people more generally, to equip themselves with the knowledge and tools they need to understand their credit report and scores. This can help them to better understand their financial standing and help them make the right financial decisions.”
Despite already being vigilant with their spending, students who take out credit for the first time are unfortunately a high risk of fraud. More than half (55%) of Gen Z reported being targeted by fraud in the last three months, with 10% having fallen victim – much higher than any other generation, with the average rate being 5%. Phishing (fraudulent emails, websites or QR codes designed to steal data) is the most common threat, with 43% of consumers having been targeted or fallen victim to a phishing scheme, this is followed by vishing (fraudulent phone calls) with 40% and smishing (fake text messages) with 37% of consumers having been targeted or fallen victim.
As students take on financial responsibilities and start to build their credit profile, TransUnion has shared some tips on how to create positive credit habits early and be aware of potential fraud risks:
● Pay bills on time
Whether it’s utilities, like water or electricity bills for a shared house or your phone contract, late or missed payments can harm your credit score, especially if your name is on the bill. Speak to your housemates about splitting household bills and who’s responsible for paying them, and set up reminders to avoid missing payments.
● Don’t apply for lots of credit at once
Making multiple applications in a short space of time can lower your credit score. Check your credit score before applying to get a sense of what products you’re likely to be eligible for.
● Budget and plan
If you live in halls, your college or university will usually take rent payments by direct debit each term, so make sure the money is there when that date comes around. A failed direct debit could incur charges with your bank, as well as impacting your credit score, and may be in breach of your rent contract as well.
● Keep an eye on your credit score
Regular checks can help you track your financial health and spot any unusual activity, which could be a warning sign of potential fraud. You can check your TransUnion credit report for free via Credit Karma, Credit Monitor from MoneySuperMarket or TotallyMoney.
● Don’t rely on your overdraft and credit limits
Although student loans won’t appear on your credit report, overdrafts, credit cards and personal loans will. Try to keep balances low or paid in full on credit cards and overdrafts, and be sure to make regular repayments.
● Watch out for scams
Fraudsters may pose as banks, delivery companies, or even friends. Be cautious about things like “free” holidays or an unexpected refund – if it seems too good to be true, it probably is. Never click suspicious links – instead, contact the company directly using official contact details.
● Report suspicious activity
If you think your details have been compromised, contact your bank immediately, consider freezing your accounts, and report the incident to Action Fraud.
Starting university is about more than lectures and late-night study sessions; it’s also about building the foundation for your future financial life. By taking steps now to manage your credit responsibly and protect yourself from fraud, you’ll be setting yourself up for success long after graduation.
Notes:
Unless otherwise stated, all figures are from TransUnion’s Consumer Pulse study, which is based on the survey of 1,000 adults in the UK, conducted between 17 July and 4 August 2025 by TransUnion in partnership with third-party research provider, Dynata.
Gen Z is defined in this research as adults aged 18-28 years old.
