How to Build credit


What is your credit score?

Your credit score:a number ranking your creditworthiness.

Credit allows people to buy things you need now and pay later(over time) e.g your house, car, education etc. Your credit score can go up or down.

There are over 7 billion people in the world and lenders will not know who to lend to so the credit bureaus came up with a formula to know who is more likely to pay the back. The formula is secret but it is widely believed to consist of these factors.

  • Payment history
  • Credit inquiries
  • Credit balance
  • Length of credit history
  • Type of credit

Why are credit scores important

If you have a high score then lenders will lend you money and at good rates.
If you have a bad score then lenders might not lend to you or will charge you high interest rates. People with bad credit could pay over £200,000 in interest charges due to bad credit.

Credit scores are important when you want to rent, get a job,get insurance, get a credit card, get a phone contract and many other things.


To Build credit you should:

-Pay your bills on time and in full

-Expand your credit.The more types of credit you have which are all paid on time the better your score.

-Register to vote on your main home address

-If you rent and pay your rent on time,then report this to the credit bureaus.

-Ask for a credit limit ncrease

-Check your credit report for any errors

-Don't close or cancel Bank accounts or credit cards. The longer you have these open, the better.

-Use only 30% of your available credit such as overdraft or credit cards. This shows that you are not too dependant on credit

-Do not make too many credit applications within 3 months. 1 every 3 months is is acceptable.

-Avoid getting rejected for credit and only make applications where you have a 95% chance of approval or are preapproved.

-Avoid adverse credit such as payday loans

-Avoid maxing out your credit card or going over your limit as it makes you seem dependant on credit. You might also incur a few fees from your credit card provider.

-Ensure you do not default on any repayments-, even if this is not credit as you can still have negative marks due to owing people or companies from things such as county court judgements, Bankruptcy or Individual voluntary agreements.

Always inform your credit provider if you are having difficulty and they could work something out with you rather than selling your debt to a collection agency which will cost you more


How to Build credit with no credit

If you have no credit file or your credit score is very low then you will need to get credit and build your score by showing good repayment behaviour.

To get credit, You will need to get:

These are all credit products you can get with no credit or very low credit scores.

They will help you build your credit file and score if you display good credit behaviour by reaying on time and using less than 30% of your available credit


Check your credit score

A higher credit score will save you a lot of money and open you up to a bigger pool of lenders when you shop for future products.

Ensure you always track your credit score so you are always up to date.It can take up to a year or more to improve your credit score..so be patient

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