Building up a credit record is important for a number of reasons, and something you will be grateful you started doing early as you start reaching key life milestones.
A good credit score makes it easier to get a mortgage when the time comes to buy a house, and it also helps if you need get credit to fund household expenses or a pricey event such as a wedding.
While specialist lenders provide loans for people with no credit, it is wise to build up a solid credit score as early as possible and here’s how:
Check your credit report
The first thing to do is to check your credit report to ensure that everything is up to date and that it depicts your financial past accurately.
Apply for a credit card
Paying for goods using your credit card is an excellent way to build up a good credit history – provided you pay it off on time.
There is a selection of cards that are specifically designed for people with no credit history, such as credit-building credit cards.
Once you have been accepted for a card, spend a little on it each month and then pay off your balance in full and on time. In order to meet payment deadlines, you could consider setting up a direct debit or standing order.
Learn to love your credit card
Once you’ve got into this pattern, repeat for as long as possible. After a year you will have a solid history of repaying credit behind you! This will make it far easier when it comes to getting credit to buy a house or fund those big life events.
For those who are wary of buying now and paying later, remember there are benefits of paying on credit card. Section 75 of the Consumer Credit Act 1974 states that the card issuer is equally liable if something goes wrong after making a purchase on a credit card costing between £100 and £30,000.
If you do miss payments and find yourself struggling financially later down the line, rest assured that specialist lenders can provide unsecured loans for bad credit.