How To Build Credit and Credit History (2024)

Your credit history is a record of how you use credit, such as when you’ve applied for it, whether you’ve paid it back, and how much you currently have access to. If you’ve recently turned 18, are new to the UK, or just haven’t held a credit account in the last six years, it’s likely you won’t have much of a credit history.

You’re probably thinking that’s a bit odd. If you’ve never needed to borrow money before and you have no debt, surely you’re the perfect person to lend to? The thing is, most lenders like to see a good track record of sensible borrowing – it helps them decide if you’re likely to pay them back on time.

Unfortunately, you’re unlikely to get a high score without having used credit – even if you’ve taken other steps to improve your rating, like registering on the electoral roll. And since you often need a good score to get approved for credit, you may feel like you’re stuck in a ‘catch 22’! We explain in detail exactly what you can do to build your credit history from scratch.

It’s worth noting that some people may have a low score because of negative influences on their credit report, such as late payments. If this is the case for you, there are ways you can improve your score.

It’s important to know that it may take up to six months to start seeing the benefits of these actions. It can take time for some information to reach us, and things like opening a new bank account or getting a credit card can lower your credit score initially, before helping it improve.

1. Get on the electoral roll. It’s quick and easy to register on the electoral roll, even if you live at home or in shared accommodation. Lenders use this information to confirm your name and address are correct and up to date, so it’s crucial to building your credit history. If you’re not eligible to register on the electoral roll (e.g. you aren’t a UK national), you can add a short notice of correction to your Experian Credit Report explaining why.
2. Open a bank account. Having a bank account and managing it well shows companies you’re financially responsible, and starts to build your credit history positively. If you have an overdraft, stay well below the limit (using no more than 25% of it is a good rule of thumb) and try to pay it off as quickly as possible.
3. Get a credit card. If you’ve opened a bank account and are managing it well, the bank may also be willing to give you a credit card to build credit. Paying it off on time and in full each month will help build a positive credit history and improve your score.
4. Take out a small form of credit. This might be a mobile phone contract or store card. They’re usually easier to get accepted for than credit cards, but can still demonstrate your ability to pay your bills on time and be financially responsible.
5. Manage your household bills well. Looking after your utility accounts (e.g. water, gas and electricity) can help build your credit history and show lenders you’re responsible. Even your rent payments can improve your score, provided you make them on time and in full – sign up to CreditLadder to arrange for information about your regular rent payments to be added to your credit history.
6. See if you could get an instant score boost. By securely connecting your current account to your Experian account, you can show us how well you manage your money. We’ll look for examples of your responsible financial behaviour, such as paying your Netflix, Spotify and Council Tax on time, and paying into savings or investment accounts. We’ll share a summary of your boosted data with participating lenders when you search or apply for credit. Find out more about Experian Boost.

As well as taking the steps above, it’s important to protect your credit history and score from damage. Here are our three top tips for keeping your score healthy:

1. Set up direct debit payments. Late or missed credit payments can lower your score and may stay on your report for up to six years, so paying bills on time is essential. Consider setting up direct debits for your payments to ensure you don’t accidentally miss one. An unpaid and ignored debt may results in a CCJ (County Court Judgement) which can negatively affect your credit.
2. Limit your credit applications. Making lots of applications in a short space of time can make it look like you’re desperate or overly reliant on credit, so try to space your applications out. When applying, lenders carry out a ‘hard search’ which leaves a mark on your report. A maximum of once every three months is a good rule of thumb, but remember that lenders’ criteria may vary.
3. Only use a small percentage of your credit limit. If possible, try to use no more than 25% of your available credit, as a higher balance may reduce your score. So, if you have a credit card limit of £500, try not to spend more than £125 on it.

Finally, when building your credit history it’s useful to keep a close eye on your credit report and make sure it’s always up to date and correct.

Get your Credit Score with Experian