Building your Credit History

By: admin

What is your credit history? in simple terms your credit history is a file which records your financial health, for example it will record when you have applied for credit, how much credit you have access to.

If you have just moved to the UK, have just turned 18 it is possible you credit history would have much to show.

Does having little or no credit history affect my credit score?

When you apply for credit such as a loan or a mobile phone contract the provider will look at your credit history to determine the level of risk you may pose. The lower your credit score is the lower your chances are of receiving credit.

If you have never applied for credit means you will have a low credit score which results in lower chances of receiving credit. If this sounds like a catch 22 situation it need not be. When companies lend money, they want to see a history of responsible borrowing, it helps them decide if you’re likely to pay them back on time.

There are simple and quick ways to build your credit history, for instance as soon as you can register onto the electoral roll if you have not done so.

What if my credit history isn’t in the UK?

You may have the best credit rating in another country but that will not count for anything here in the UK, you will have to start from the beginning even if you are an expat.

If you are looking for a loan here in the UK we would advise that you take a copy of your credit report in your current country and send it to your lender, this could help with your application

Where can I see my credit history?

A Credit Reference Agency or CRA retains a credit report on your financial credit history using information they have access to, this can mean that there may be discrepancies between the various credit agencies based on which information they have about your credit history.

If you want to get a copy of your free Experian Credit Score by signing up with Experian you will get to see your up-to-date Experian Credit Report, and you will get personalised tips for improving your credit score and report alerts.

How can I build up my credit history?

Here are some simple ways to start building up your credit score and greatly improving your chances of being accepted for credit.

Please bear in mind that some of these steps may take up to six months to start showing up in your credit report, but we advise that the sooner you start the sooner you can take advantage of having a healthy credit score.

  • Open a bank account. If you don’t already have one, then we recommend that you open a bank account today, this shows credit firms that you are financially responsible. If your bank account comes with an overdraft be sure to never exceed more than 25% and pay it off as quickly as possible.
  • This is a simple step, if you are not already on the electoral roll get yourself registered today, even if you live at home with your parents or in shared accommodation. Credit firms will use this information to confirm your name and address are correct. If you are not a UK national you can add a short notice of correction to your Experian Credit Report to explain why you are not on the electoral roll.
  • Take out a store card or a mobile phone contract, these small forms of credit are usually easier to be get accepted for than to be accepted for credit cards, and can show to credit firms your ability to pay your bills and repay any balances on time, remember, credit firms want to see you being financially responsible.
  • If you have opened a bank account, try to apply for a credit card. Some banks are happy to give you a credit card to build credit. Paying off your credit card in full at the end of each month will help build a positive credit history and improve your score.
  • Pay your household bills on time, things like water, electricity and gas, again this will demonstrate to credit forms that you are financially responsible and will help build your credit score and history.

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk