A credit builder card is a specific type of credit card designed to help individuals with a poor credit history boost their credit scores. However, if you don’t want to try this approach or have been refused a credit card in the past, there are other ways of improving your credit score.
The following steps can help you to improve your credit score:
1. Get on the electoral roll
A quick and easy way to improve your credit score is to register on the electoral roll. You can do this by registering to vote on the GOV.UK website.
Potential lenders use the electoral roll to confirm your identity and address. You could be rejected for credit if the address you use on your application form does not match the one at which you’re registered to vote.
2. Make sure your name is on household bills
If you share household bills with a housemate or partner, make sure your name is down as the billpayer on at least one of them.
If your name is not on a bill, there will be no record of you contributing towards these regular payments. Most utility bills, including those for energy use, appear on your credit report if you’re listed as the billpayer. If your name appears and you make your payments on time, it can help to improve your credit score.
Having a mobile phone contract and making your monthly payments on time can also positively impact your credit score.
3. Take out a personal loan
If you have a ‘thin’ credit file, it can be harder to get accepted for any form of credit. That’s because lenders have no way of knowing how responsible you are as a borrower and whether you are likely to repay your loan on time.
However, some lenders (particularly specialist online lenders) will be more lenient with their lending criteria. This means you may be accepted for a personal loan even if you don’t have a long borrowing history or the best credit rating.
Keep in mind that you might not be able to borrow a huge sum with these loans and will likely pay a higher rate of interest than someone with a good credit score. However, if you make your repayments on time and clear the loan quickly, you could build up your credit score over time.
4. Repay outstanding debts
Any debts you haven’t repaid can contribute to a lower credit score. This means it’s important to clear those debts as soon as possible. Once you’ve done so, they will show up on your credit report as repaid debts, and your credit score should go up as a result.
5. Remove financial links
If you’ve taken out a joint current account or mortgage, your credit report will show a financial association between you and your co-borrower.
Although this won’t directly affect your credit score, your chances of getting credit could be affected if the other person has a poor credit history. That’s because lenders may check the other person’s credit file when assessing whether to accept you.
If you no longer share an account with that person, write to the credit reference agencies and ask for the link to be removed. That way, the other person’s credit file will no longer affect yours.
6. Make your rent count
If you rent, make sure your rent payments are added to your credit report. Depending on your situation, you can ask your landlord to report your rental payments to Experian’s The Rental Exchange. You can also report the payments yourself through one of Experian’s partners, such as Canopy, Emma or CreditLadder.
This gives you credit for paying your rent on time, which can increase your credit score.
Experian Boost also helps you raise your credit score by sharing information about Council Tax payments and subscriptions you may have, such as Netflix or Spotify.
Benefits of improving your credit score
Improving your credit score has a host of benefits, including:
Being able to borrow more: A higher credit score means you’re more likely to be offered higher credit limits as lenders regard you as a lower risk
Securing better interest rates: If you have a good credit score, you’re likely to be offered more competitive interest rates
Accessing a wider range of products: You can choose from a wider range of loans, mortgages and credit cards
Improving your chances of getting a mortgage or rental property: Mortgage lenders and landlords review your credit score before making any offers
Providing job security: Some employers check your credit history before offering you a job
How can your credit score impact you?
If you don’t have a good credit score, you’ll likely find it harder to get accepted for loans, mortgages and credit cards. You’ll also typically have fewer lenders to choose from.
A low credit score can suggest that you’ve had financial problems in the past. This means lenders tend to view you as a higher risk and might reject your application. Or, if they do accept you, they might charge higher interest rates or reduce the amount you can borrow.
How to check your credit report
You can check your credit report with the three main credit reference agencies (CRAs) – Experian, Equifax and TransUnion. Your free statutory report will offer a snapshot of your credit history. You can also pay a monthly fee to access a more detailed report – there’s usually the option to sign up for a 30-day free trial first.
It’s worth checking your reports from all three CRAs, as different lenders use different CRAs or a combination of credit information from multiple CRAs.
It’s also sensible to check your credit report regularly to ensure there are no mistakes. If you spot any errors (even something as simple as a wrong address), contact the credit provider or credit reference agency to get the mistake corrected.
Find out how to dispute your credit report
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