How to build or repair your credit score

If you have no credit record, it’s almost as bad as having a poor credit record when it comes to applying for credit.

The problem with having no credit history is that a prospective lender has no track record of your borrowing on which to base their decision on whether to lend to you or not.

A Credit builder card is a steppingstone to help you prove that you are a good risk – if you are smart in the way you use it.

Credit builder cards are an ideal way to start showing that you can borrow responsibly but many people are probably put off by the high interest rates – but if used correctly this shouldn’t be an issue.

If you take out a credit builder card, use it to purchase something you already buy – such as petrol or some of your food shopping – don’t think you need to spend big or buy something different.

If you repay your card balance in full every month you won’t have to pay a penny in interest charges – hence why the high rates shouldn’t deter you from applying.

After 12-18 months of using your card and paying it off each month you will have built a decent track record and shown you are capable of managing credit – this should help you get accepted for a mainstream credit card at a much lower rate and with 0% offers.

A credit report is also a very important part of your overall financial armoury – particularly so if you are planning to take out a personal loan or mortgage in the next couple of years.

I’d recommend TotallyMoney or Clearscore – both offer a free service with your score and report updated and sent to your email inbox every month.

TotallyMoney also offers a neat add on (also free) called ‘borrowing power’ which shows you which cards and loans you are most likely to be accepted for.

There are a range of providers offering credit builder cards – take a look at Tesco Bank, Aqua or Tandem Bank to find a deal that’s right for you.

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