* Escalating student debt spells big trouble for credit files in the future

* Graduates likely to be servicing £15,000 debts until their mid-30s

Students face a potentially 'calamitous' problem with their credit histories on graduation thanks to the now inevitable prospect of leaving college or university with high debt levels.

Moneynet.co.uk, the online financial data comparison site, has warned students to keep a close eye on their credit files and to ensure that they keep up to date on all credit card repayments and loan debt - otherwise they could be in for a nasty shock when it comes to arranging mortgages and credit in the future.

"The major credit reference agencies such as Equifax and Experian hold detailed files on our financial histories, which start as soon as we open a bank or credit related account," said Moneynet chief executive Richard Brown.

"The majority of graduates are looking at servicing a minimum debt of £15,000 (see note 1) until their mid-thirties, which is clearly not the best way to start out when it comes to wanting to arrange a mortgage or anything else requiring a sound credit history.

"So we would advise students to keep an eye on their credit files to make sure all the information held on them is accurate. In addition, it is crucial that students understand the importance of not over-committing themselves as missed payments could mean they have accumulated an adverse credit history even before they embark on a professional career. This could take years to repair." added Brown.

Brown also advised new - and existing - students to make sure they are getting the best from their student bank accounts. And to avoid being seduced by gimmicky special offers designed to secure their lucrative business.

"Banks love students as they want to keep their business when they graduate: but most young people can afford to be choosy when it comes to picking a bank. We would always encourage new account openers not to be blinded by the marketing razzamatazz, and to focus on core banking services, free overdrafts and decent rates of interest," said Brown.

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Note (1)

Last month the Government confirmed that after the introduction of top-up fees in 2006, while 400,000 students may be able to claim non-repayable grants and bursaries, most will service a minimum debt of £15,000 until at least their mid-thirties. High street banks maintain that in reality the average graduate debt, including fees, for those entering university next year is likely to be nearer double that by 2009.

And a recent survey by NatWest Bank this month suggested that freshers starting university in the autumn expect to spend £28,600 over the three years of their degree courses and to graduate owing nearly £14,000.

Moneynet has a free guide to Student Finance - Moneynet Student Finance Guide

Press enquiries

Moneynet: Richard Brown, Chief Executive, 020 8313 9030

David Andrews Media Ltd Cathy Tully, 01273 774109 cathy@davidandrewsmedia.co.uk

Consumer enquiries: online@moneynet.co.uk http://www.moneynet.co.uk

Editor's notes

Moneynet.co.uk is the UK's most established personal finance research and data website. The company offers consumers a wide range of low cost financial products: from mortgages and personal loans; to car, home and medical insurance; credit cards; savings accounts and best-buy fixed rate products. Moneynet.co.uk is an ethical, impartial and comprehensive source of consumer finance information, covering the whole of the personal finance sector.
About the Author

Moneynet was founded in 1997 by Chief Executive Richard Brown to simplify the personal finance market and provide consumers with impartial and interactive information on financial products and services.