Building a Good Credit History – Things you need to know

Your credit rating reflects how much of a risk you represent to lenders and affects your ability to secure a loan, mortgage, credit, rentals, even mobile phone contracts! Your credit score can affect the rate of interest you will be charged and the amount you can borrow.  Building a good credit history will improve your rating and help you secure better deals.
So how can you start?

credit rating explained



  • You may not realise that you could already be building your credit history. As soon as you open a current bank account and start paying bills e.g. rent, phone bill etc. you have a credit score and build credit history. If you’re managing your money responsibly, making sure you have enough in your account to cover payments, you will be helping your credit rating.


  • The easiest way to keep on top of paying regular bills like utilities and mobile phone, is to set up Direct Debits; that will help to avoid missed payments and you sometimes get a discount for paying by Direct Debit. For credit cards, arrange to repay at least the minimum amount required each month (or preferably the full monthly balance so you avoid incurring interest).


  • It isn’t advisable to take out a credit card or loan until you’re earning regular income – this will save you falling into debt by missing payments when work isn’t consistent and having a derogatory mark on your credit score.


  • Your student loan DOESN’T affect your credit rating – don’t rush to pay it back quicker than you need to! However, you should declare it on any credit or loan application, as it affects your ability to repay other loans.


  • Make sure you are on the electoral register at your current address – without registering, it can be difficult to get any credit at all; lenders will want to check you live where you say you do.


  • Derogatory marks (negative credit rating scores) can stay for up to 7 years, depending on the severity. If you find you have missed payments on your credit card, loan, rent etc., immediately call your bank and explain the situation. This can at least improve your score, if not eliminate the derogatory mark – if you can pay it there and then.


  • Do check your credit report – you can do this every 6 months or so, we suggest particularly before you apply for a loan, mortgage or credit card. The following sites Experian, Equifax or Callcredit can give you this information.


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Further Resources

Money: A User’s Guide by Laura Whateley
Cuts through all the panic of personal finances. It will teach you how to get a great credit score, how to save hundreds on bills, and offer practical advice on every difficult conversation you’ve been avoiding


Credit Ratings
What is a credit rating, why it’s important, and how to build one


Types of Borrowing
Overview of borrowing options – pros & cons and what to check