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How to build credit fast

Smart spending
How to build credit fast
Smart spending

Whether you’re young, new to the country or have had money problems in the past, building credit fast is easy.

It’s not unusual to have problems getting credit if you’re young, have just moved to a new country or have had money problems in the past. But don’t worry. You can easily build credit fast by following a few simple tips.


Why is it important to build your credit score?

Your credit score tells companies how risky it is to lend to you. If you have a bad credit score or don’t have a credit history, it can mean:

  • You pay more. Companies may ask you to pay a higher interest rate if you’re a risky borrower.
  • You have fewer payment options. The most flexible payment options are usually offered to people with a good credit score. Without one, you might have to pay up front.
  • A company will refuse to offer you a product or service. In some cases, you’ll be turned down if you have a bad credit history.

A good credit score can save up to £2,690 a year in interest, according to Credit Karma.

Whether you’re a student, young professional or a new immigrant, a poor credit score can make life more difficult than it needs to be. Keep reading to find out how to build credit.


What is a credit score?

The main credit reference agencies in the UK are:

  • Experian
  • Equifax
  • TransUnion

They all use different scales, but your score will usually fall into one of five different categories: excellent, good, fair, bad and very bad.

The number of your credit score will be different at each of the agencies, but your category will probably be the same.

Here’s how each of the main agencies score the top three categories:

main agencies score

Any score below these is bad and may affect your chances of getting mobile phone contracts, loans, credit cards or mortgages, even if you have the money to pay for them.

In Ireland, credit information is managed by the government through the Central Credit Register.


Can you build your credit score without a credit card?

Yes. If you want to build a credit score from scratch or improve your credit report, there are lots of things you can do even without a credit card. These include:

  • Registering to vote at your current address.
  • Opening a bank account.
  • Setting up direct debits for gas and electricity bills and other regular payments.
  • Always paying on time and avoiding going into overdraft.

All of these show up on your credit report and will build your credit score. But it will take time. Staying at the same address and with the same bank will both help you to get a good credit score, and so will a clean history of paying bills. The longer the better.

Before you get a credit card or bank account, you can still enjoy the flexibility of shopping online with a prepaid credit card. These can also be a good way to manage your spending as you find your feet after graduation or arriving in a new country.

There is no risk of hurting your credit score by using a prepaid card and they can be a useful way of staying within your budget as you work towards a good credit score.

Prepaid cards can also help to protect your online privacy and reduce your chances of becoming a victim of online fraud by allowing you to make secure and anonymous payments. If you’re interested in a prepaid credit card, some of the popular choices are BITSA and paysafecard.


Can you build a credit score with a debit card?

Sort of. Most debit cards don’t show up on a credit report or help build your credit score, but you can get credit-building prepaid cards that will help to build credit fast, whether you’re starting from scratch or looking to repair your credit history.

Providers will still check your credit score, but these cards are designed for people with poor credit histories. Even so, it’s worth trying some of the other steps to build your credit score before applying.

Credit-building cards are not free. That’s because these cards work by “lending” you an annual fee, which you then pay off each month. If you keep up the payments, you could see your credit score improve after as little as three months.

After a year, you can keep using the card with or without the credit-building feature.


Three ways to build credit fast

If you want to know how to build credit fast, follow these three tips:

  1. Fix mistakes in your credit report.
  2. Get more credit.
  3. Self-report your payments.


Tip 1: Fix mistakes in your credit report

Fixing mistakes in your credit report is the easiest way to build credit fast. It’s free to check your credit history and you have a legal right to know it, so you should always start here.

If there are any mistakes or your address is wrong (even a typo can matter), get in touch with the company and ask them to put it right. And don’t be afraid to dispute any negative information that you think is wrong.

Also check to make sure you’re on the electoral roll and listed at the right address — even if you’re living with your parents or in shared accommodation.

You can even put a better light on missed payments or other problems in your credit history. If you were ill or lost your job, for example, you can contact the credit agencies and ask for a Notice of Correction to explain any special circumstances that may have affected your history.

Your credit report will also show any personal connections who are affecting your credit (positively or negatively). Make sure these are up to date and consider if a change in circumstances, such as moving out of shared accommodation, could help.

If there is anything on your report that you don’t recognise, such as a loan you didn’t take out, you may have been the victim of fraud. This can obviously affect your credit score. You should contact the police to report this and follow their advice.

How to get your credit report

The easiest way is to get a free statutory credit report through any of the credit agencies. This will show all the basic information included in your credit history and will highlight any problems.

This usually supplies enough information if you just want to build credit fast. But if you want to see your score you can use the tools provided by each of the credit agencies at their websites:

These tools can also show you how to build credit, but not all of them are free.


Tip 2: Get more credit

It might sound strange but having lots of credit is key to a good credit score. It’s not as daft as it sounds. If lots of other companies are willing to lend to you, it shows that you’re a good borrower who probably pays their bills.

Getting a credit card, if you can, is the surest way to build credit fast. The higher the credit limit, the more it will build your credit score. Just make sure to keep your balance low.

Credit agencies recommend that you should use less than 30% of your limit. So, if your card has a credit limit of £1,000, try to always keep your balance less than £300. This is because the credit agencies could update their records before you make your monthly payment, so it’s safest to always stay below the 30% level. Try to get a higher limit if 30% is too low.


Tip 3: Self-report your payments

If you don’t have a credit card, self-reporting some of your regular payments can help show that you’re financially responsible.

Experian Boost is a free tool that lets you share information about your regular spending with the UK’s biggest credit agency, including digital subscriptions such as Netflix and Spotify, as well as Council Tax payments and contributions to a savings account.

Another choice is CreditLadder, which lets you report your rent payments to one of the major credit reference agencies for free. You’ll have to pay to report to all three but improving your score at one agency is a good start.

Mistakes to avoid when trying to build credit score

It’s easy to make mistakes if you aren’t sure about how to build credit your score. Avoid these pitfalls:

Written by

Kristina Kalpaklieva