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How to Build a Credit Score With No Credit History

Surely having no credit history is better than having a poor credit history, right? Unfortunately, not always. While this realistically makes sense, being ‘credit invisible’ can actually cause you problems in the future when it comes to applying for loans, mortgages and financing a new car.

You might not give your credit history a second thought, especially if you ordinarily pay with cash, or you don’t need to borrow money, but when the time comes, having a thin credit file, or no history at all can really stand in your way from achieving life’s important milestones. It’s not just about getting that mortgage approved, or securing that new set of wheels, either. Weak credit history can also compromise other life events too, like renting a flat, buying insurance, opening utility accounts, and even applying for a job.

The good news is that if you have no credit history, there are simple ways to build it up from scratch, putting you in a better position for your future finances. Want to know how? Here are 5 ways to build credit from the ground up:

12th April 2022

1. Apply for your own credit card

If you have a bank account and are managing it well, your bank may be willing to give you your own credit card. These cards can help you grow and improve credit scores massively, as their purpose is to show you how to manage credit regularly and efficiently. There are certain credit cards designed specifically to help you build credit, such as Barclaycard.

So, if your bank grants you the opportunity to have a credit card, it may be worth considering. The best way to build credit in this situation is to use it regularly whilst making all of your payments on time. You should also only use a small portion of the card’s limit, as this proves to banks you’re not excessively spending, but instead, managing payments and repayments.

2. Apply for a secured credit card

Secured credit cards can be very beneficial if you’re looking to start building up your credit score from scratch.

It’s also (typically) easier to qualify for a secured card, because they require a deposit that essentially ‘secures’ them. They also tend to have varied credit limits, but most often they’re equal to the amount you paid for the deposit.

And not all secured credit cards are the same. For example, some charge an annual fee, and some come with other additional fees. So, if you’re considering building up your credit this way, it’s worth shopping around to see which card fits your circumstances most.

And once your secured card establishes a positive payment history, some banks will reimburse your deposit, or allow you to upgrade to an unsecured credit card.

3. Always pay (or pay back) on time

If you want to avoid credit cards entirely, which is perfectly valid too, there are alternatives like Experian Boost, Experian’s free and simple tools that takes into account more than just the usual credit information. With this you can build credit by paying your monthly utility bills, phone contracts and even some streaming services like Netflix and Disney+ (on time, of course)

All you have to do is connect the bank account you pay your bills with to Experian using Open Banking (find out what that is here).

4. Report your rental payments

Are you currently renting while saving to put a deposit down on a house, and get your first mortgage? While paying rent on time obviously proves that you’re sensible with money, and you can navigate your finances, the payments you make aren’t usually added to your credit reports.

By using rent-reporting services like The Rental Exchange Initiative, you can get your payments added to your reports, which will provide future lenders proof of your rental history, and paying on time. These services allow rental payment data to be viewed in the same way that mortgage payments are seen, and allow renters access to a range of benefits, including housing and credit providers.

So, if long-term financial stability is something you strive for, it’s essential you start building your credit score now - and it can be done even if you don’t have a history. By implementing either of these 5 different strategies, you’ll be able to build your credit from the ground up, and achieve your financial goals much quicker.