Money: 4 Easy Ways To Build Your Credit Score
Starting a family has been amazing; having Luke and Oscar have been my proudest moments in life and nothing will ever top that. The absolute cherry on the top would be for Mikey and I to get ourselves onto the property ladder and secure ourselves a proper family home. I aspire to own a beautiful house that my kids can grow up in and still consider their home, even when they’ve long since flown the nest.
To achieve all of this, we will obviously need to get a mortgage. To get a mortgage, we need to have relatively decent credit ratings, as well as meeting all the other criteria. Honestly, I personally don’t have much of a credit history, so building up my credit score is something that I have been thinking about a lot lately. There are a few ways to build your credit score and it does all seem pretty daunting at first, but I think it’s really quite simple once you’ve got your head around it all.
Two important things I’ve learnt when doing my own research are:
- it’s better to start building credit up sooner, rather than later
- having a non-existent credit history is almost, if not just as bad, as having a bad credit history.
What is a credit score?
First thing’s first – what is this magical credit score and why do I need it? Put simply, a credit score shows how likely you are to be be accepted for credit. ‘Credit’ is borrowed money that you agree you will pay it back at a later date. A myth which I had heard and believed up until recently is that your credit score is universal. This simply isn’t true – each lender scores you differently and will assess whether you’re a high risk or low risk borrower. You need to have a good credit score if you’re looking to taking out loans and mortgages as, the higher your score, the less you’ll be charge and the more you’ll be eligible to borrow. A good credit score means that banks and money lenders will see you as a trustworthy individual who is capable of paying back all the money you’ve borrowed.
Overdrafts
If you’re reading this, it’s likely that you have a bank account and a debit card, just like me. What I don’t have on my current account right now is an overdraft. Up until recently, I never really thought that I needed one…I’m not one to make big impulse purchases and I have always preferred to only spend the money I actually have. However, if I want to start building up my credit score and ultimately secure that mortgage, I need to show that I can handle my finances and repay my debts. Most current accounts come with the option to add an overdraft, so this is a good place to start if you’re looking to improve your credit score. Simply pop online or into your bank and see what they can do for you.
Credit Builders
I didn’t even know credit builders existed until very recently. They’re designed to help you build credit without running a credit check on you beforehand. Usually the credit builder is an option you can apply to a card, whereby you are effectively given a loan that you pay back in monthly installments. It’s worth noting that although it’s a convenient way to build up your credit score, they are likely to come with monthly fees.
Store Cards
Woohoo, something that I actually own: store cards! But…guess what? I rarely use them. Another epic fail for me on the credit history front. The good news is that store cards are pretty rife and most retailers have them. The bad news is that they often have extortionate interest rates attached to them. I’ve been looking into how I could use mine to help me improve my credit score and it seems that you really can reap the rewards without too much of a dent to the bank balance. The trick is to use the store card, take advantage of the benefits and then pay it off before you get stung by the interest payments. I’ll definitely be looking to obtaining other store cards in the future, but I must remember to space out the applications as signing up to lots at the same time can do more damage than good.
Short-Term Loans
Getting credit and then proving that you can pay it back is what a credit score is all about. With that in mind, it may be worth taking out a short-term loan with somewhere like CashLady, especially if you have a poor credit score already. Short-term loans have high interest rates, so it’s imperative that you understand the financial commitment you’re undertaking if you do decided to take out a short-term/payday loan. If you’ve made a few financial mistakes in the past and you’re now in a better position and trying to build up your credit score, something like this could help you out.
Building a credit score seems like a daunting task, but with the right research, it is totally doable. For me, it’s clear that I need to start straight away. Up until now, having no credit history hasn’t really affected me, but now that we’re planning our future together, it’s all hands on deck! If you have a bad credit history, or like me, a practically non-existent one, hopefully these tips will help you on your way to improving that 3-digit number and proving to lenders that you’re a low risk borrower. I’d love to hear any tips that you have for building up your credit score, so please do leave them in the comment section!
*This is a sponsored post
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Lukeosaurus And Me
Rachael is a 31 year old mum to 10 year old Luke and 5 year old Oscar. She lives in England and writes about family life, crafts, recipes, parenting wins(and fails), as well as travel, days out, fashion and living the frugal lifestyle.
25 Comments
lauren porter
Ugh we had to go through all this when getting our mortgage – nightmare!! If you are about to apply for one, make sure you are all on the electoral roll as well as we had issues with that & it stopped us getting one for a while!
Jen - Mighty Mama Bear
Great tips. I found having no credit to be a massive problem when I was younger, and having a credit card and paying it off in full each month really helped.
Sonia
Great tips. I’d love to know what my credit score is. I haven’t had any loans or credit cards in over 15 years so I’d be very interested to see if I could get one.
Sarah
This is a really interesting read! I have no credit score, but I really like the sound of the credit builders, but I understand you’d still need to be wary x
Helen Copson
This is really helpful. I remember when I was getting a mortgage on my own about 10 years ago, I couldn’t understand how me not having ever had any loans or credit cards actually went against me!
Lisa
Great tips. I love checking my credit score as much as I like checking my blog stats. We’re hopefully going to be on the property ladder in the Not too distant future x
Stephanie
Yes it’s a very good idea to show lenders you can have credit and you can pay it back too. Good advice, thanks
Kelly
I struggled so much when I first moved to the UK. I had no credit history in this country and there’s a fabulous catch 22 in the UK that you can’t get a job without a bank account and you can’t get a bank account without a job. Fabulous. Anyway, luckily a friend sponsored me to get a basic account and some 4 years later I eventually was a home owner.
Katy - Hot Pink Wellingtons
I remember taking out a credit card a few years before I thought I’d be considering applying for a mortgage for this exact purpose. I’ve always had a direct debit to pay off the balance in full every month, but it’s so important to be able to show that you can handle repaying your debts.
Dani
These are some great tips!
I have been building up my credit history for when I want to buy a house 🙂
Dani x
Victoria
We have recently been trying to grow our credit score so thank you for the tips. We have took out a credit card to help grow ours.
Tash
Some really helpful information here, I am sure this will really help people out.
Tash
Some really great tips here, this will be so helpful for lots of people
Anosa
I am loving these tips as I am slowly working to improve my credit score which at the moment needs all the help I can get
Kaz | Ickle Pickles Life and Travels
I am left with a poor credit score after my ex ran up debts in my name and wouldn’t pay them back. I can’t worry about it though. Kaz
Jennifer Gladwin
Great advice here. My credit rating was terrible when I was younger but I’ve managed to build it back up.
Rachel
Such useful advice and tips that arent too hard for people to do. Will help me and many out I am sure!
Joanna
I know how important the credit score is so I have always been very careful to never to anything that could lower mine. I have always paid everything on time and got smart with my credit cards by using balance transfers.
Katherine Hackworthy
It’s really good to read some basic solid advice on matters that we sometimes don’t even think of. Some great advice and helpful tips for managing and improving your credit score.
Charli
I got a credit card purely so I could build me credit score … luckily, I now have the best rating you can get! Just need to worry about a deposit for a mortgage now!
Emily
I think a lot of people don’t realise that if you have never had credit, you won’t be building your score.
Lisa Jane
This is a really helpful post. A lot of my friends left it until too late to worry about improving their credit score, i.e when they went to get a mortgage. It’s helpful to start thinking about these steps years before being ready to get a mortgage.
Connor Silver
Great post. We are currently doing this at the moment and are currently balance transferring to lower interest rate cards 🙂
lou
These are great tips for building (or re-building) your credit score. Mine was pretty bad after being a single mum at a young age, and I built mine back up by using a credit building card. It worked brilliantly!
Louise x
Becca Talbot
Some really handy tips here for anyone who needs to build up their credit score 🙂 I had to build mine up before applying for my mortgage, so I know first hand how important it is to have a good credit score x