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How to build up your credit history

Being in debt may feel daunting, but it's how you manage it that matters. There are ways to make this easier. Learn how you can tackle your debt and build a healthy credit score.

What is a credit report?

When you apply for a credit card, loan, overdraft or mortgage, lenders will do a credit check. This includes how much credit you've been given and how you've managed your repayments. They will also factor in the information asked in your application. Based on this, they'll decide whether you're likely to repay the credit they give you.

What data appears on your credit report?

  • Personal information - Name, ID number, date of birth, addresses and telephone numbers
  • Credit activities - Credit usage and repayment history
  • Public record - Litigation relating to recovery of debt, bankruptcy and winding-up petitions
  • Enquiry records - Members' reviews within the last 2 years
  • Credit score - A numerical snapshot of your credit report

What data doesn't appear on your report?

Data not recorded on your credit report includes your employment history, savings accounts, criminal records, medical records, ethnicity, and religion.

How do lenders and other organisations use your credit report?

Lenders use the information in your credit report to help them assess your financial behaviour. Using their own unique criteria, they review this data along with other information you may provide such as your job and salary, and then decide if you're a good candidate for credit. Typically, they're looking to assess whether you're likely to pay back what they lend you.

It's worth noting that lenders can only look at your credit report with your permission.

Organisations may also access certain aspects your credit report to confirm your identity to help prevent fraud.

How to start building a credit history

Start a borrowing history

You can build up your credit history by using a credit card or taking out a loan. Make sure you manage your borrowing responsibly (e.g. borrowing only if you can repay and making payments on time). This will demonstrate that you can have a responsible, ongoing relationship with a bank.

Set up some Direct Debits

Always make sure you have enough money in your bank account to pay any bills being paid by Direct Debit or standing order. Set up some regular Direct Debit payments to pay bills such as your gas and electricity or your home insurance or mobile phone.

Don't miss payments

Make sure you pay all your bills on time, as a missed or late payment will count against you.

How to manage existing debt

Being in debt costs money. There may be fees for taking out a loan or having a credit card. That's why minimising debt, as far as possible, is essential for your financial wellbeing.

If you are struggling with the high price of debt, you have several options:

  1. Cut back
    Many people are in debt trying to pay for things that they can't afford, like a big home, a car, or even just eating out regularly. If this sounds like you, consider ways to reduce how much you spend.
  2. Consolidate your debts
    If you have multiple debts, it may be cheaper to consolidate these into a single loan if it means a lower interest rate. Be aware of fees. You'll need to consider if there are fees and costs associated with repaying or consolidating your loans. And if it will result in less debt to repay overall.

If you're struggling to pay off your debts, we're here to support you. Our specialists can work out a tailored repayment plan that meets your needs. Learn more