A simples guide

How to build your credit score

If you want to qualify for a mortgage, credit card or even a phone contract, then it’s important to have a good credit score. If you’ve had trouble in the past, or even if you have never taken credit before, then you may have a low score and be unable to qualify for credit.

There are ways to build your credit score though, and a prepaid credit card is one of the most effective solutions. Check out the best deals on our site right now, and you may be surprised just how fast you can repair your credit rating when you know how to build your credit score.

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What factors can decrease a credit score?

When you apply for credit, the lender will look at your financial history in order to evaluate your spending habits and to see if you represent a risk of not repaying the amount you want to borrow. Over the years, your payment history, earnings, available credit and more have been refined into a simple credit score that forms the basis of a lender’s decision.

The lender may consult the public records, so if you have been made bankrupt, have County Court Judgements (CCJs) or other serious financial mishaps, it will be harder to obtain credit and they will lower your score. If you have a long history of making payments on time, your score will inevitably be higher.

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Additional factors that can decrease a credit score

The lender will also look at your account history and recent credit applications. If you have opened a number of different accounts, or simply applied, this will all have a negative impact on your credit score. If you have a solid income and service all of your accounts, this may not be the case, but it’s generally considered bad for your score to make a series of applications in a short timeframe. Remember, making an application and not following through with the credit offer will affect your credit score.

If you have any of these issues, you need to know how to build credit score.

How to boost your score

Regardless of whether your score is low or not, some prepaid cards can help you build your credit score with a small loan. Most people with bad credit can still often obtain a small loan over a long period, even as little as £50 over the course of six months. Making sure that you don’t miss payments on this loan, will help to improve your score – just remember that you will be paying interest on top of the loan amount. 

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Can being refused credit affect your credit score?

If you are refused credit then it will not show up on your credit report. Whilst not directly having a negative impact, the fact that you made an application will show up as a footprint. It’s therefore a good idea not apply to a huge number of places at once as lenders can see these footprints and may become concerned that you may have financial difficulties or you might be committing fraud. It’s important that if you are refused credit, you find out why before making another application to avoid being turned down soon after for a second time.

What does a poor credit score affect?

A poor credit score can have a pretty big impact in the modern world. It could mean that you would be rejected if you apply for a mortgage. So if you’re thinking of buying a house and you know there are problems with your credit, then you should really try everything to rebuild it for at least one year before you apply.

A poor credit score can also prevent you getting the best deals and promotional rates on certain credit cards. It can even prevent you from getting 0% interest deals that could make your life easier and could force you to take a high-interest alternative that will cost you much more in the long run.

You may struggle to get access to loans, too. Utility companies may even demand upfront payments for poor credit scores, leading to further inconvenience from a financial perspective.

If you have missed payments or you have struggled to meet your commitments in the past, then you need to know how to build up your credit score. A prepaid credit card or small loan can help you on your way, so check out the best deals right now with us. You can compare some of the biggest names in a single submission by letting us take care of all the hard work for you.

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