How to build up your credit rating in 10 steps

How to build up your credit rating

Building up your credit rating is essential for anyone who wants to maximise their chances of taking out a loan or credit card. After all, a company will only lend you money if they are confident in your ability to pay it back. It’s all about trust. And the way they work out whether you’re trustworthy, is by looking at your credit score.

There are a wide variety of factors which affect your credit rating. So, here we’re going to show you what these factors are and – most importantly – how you can make yourself an attractive proposition to anyone in the business of lending money.

The 10 things you need to do to build up your credit rating

1. Do everything you can to be attractive to lenders

While many people go on the lookout for that one they can do to build up their credit rating, in reality, it requires a methodical approach. Think of it as a date with the person of your dreams. Will you just throw on any rags, leave your hair in a mess and walk out the door? Not likely!

The same should be true when it comes to applying for credit. That means doing everything in your power to make yourself as desirable as possible to the lender. In other words, don’t just take on board one or two tips. Instead, take the time to read this article in full, and make a list of all the actions you need to take in order to build your credit rating.

2, Register to vote

Let’s start with something super-simple. It’s much easier to get accepted for credit when you’re on the electoral roll. The good thing is you don’t have to wait for elections to come around, you can register right now by visiting and following the instructions on their site.

So, if you’re not already registered (or are not sure), then do so now.

The reason it’s important is because credit agencies like to be sure of your identity. Even if you know you have a good credit history, it’s still important to take this action, so that they know it definitely is you.

3. Check your credit report every year

Equifax, Transunion and Experian are the three big credit agencies who gauge your credit rating. They amass a huge amount of data about you. Scary, eh?

The problem is, they sometimes get things wrong! For that reason it’s important to check your credit reports. Get ready to grab your favourite fine-tooth comb and get started…

One error on a credit report could ruin your chances of getting credit. And keep in mind: different lenders use different credit agencies. So, if possible check all three because you won’t know what agency the lender might be using to get your credit score.

It’s worth checking them every year and before making a major credit application.

4. Build your credit history

Without a history of taking out loans and paying them back, a lender will not consider you a trusty borrower. After all, they need evidence.

For that reason you need to start building up a body of evidence to convince them you would make a trustworthy borrower. This, in turn, will boost your credit score.

Here’s a summary of what you need to do to build your credit history:

  1. Open a bank account: the simple fact of having a bank account, which you manage effectively, can demonstrate that you’re a financially responsible person. If you take out an overdraft, be sure to pay it back quickly – and stay well within the overdraft limit.
  2. Take out a credit card: If you have a bank account which you’re managing responsibly, then the bank itself might offer you a credit card. This could be your chance to build a credit history and show how reliable you are when it comes paying it off on time.
  3. Take out a small form of credit: If a credit card is something you might struggle to manage right now, then taking out a mobile phone contract or store card is a simple way to get started. By keeping up with payments, it offers proof that you can pay bills on time (even if they are teeny-tiny ones).
  4. Pay your household bills on time: Yes, this too can affect your credit score. Paying your utility bills on time (water, electricity, gas) is another way of proving you are a responsible person when it comes to handling money.

5. Close unused cards and contracts

Do you have any unused credit cards, debit cards, store cards or mobile contracts? Lenders may look at the amount of credit you have access to. The more credit ‘channels’ you have open, the less positively lenders may consider your application.

So, get in contact with the providers you no longer use, and make sure all your accounts are closed. Cutting up cards doesn’t show up on a database; make sure the computer knows!

6. Make payments on time

It’s worth reiterating that whatever form of credit you have access to now, make sure you pay in full and on time. Missed and late payments stay on your file for up to six years.

If you’ve ever made a late payment that was no fault of your own, then you might be able to have this removed from your record. For example, perhaps you didn’t get a direct debit set up in time, but when you noticed you immediately rectified it. In this scenario, you might be able to get this black mark removed. The same goes for utility bills.

7. Pay back your debts

If you have a debt, make sure you pay it off. If you pay back more than the minimum repayment, then even better as this suggests you are a proactive debt re-payer.

8 Open new credit accounts sparingly

If you start rapidly opening new credit accounts, this may flag you up as a risky proposition. Instead, take a focused approach and only access the credit you need. Only take out credit if you need it, don’t just take it out because you can.

If you’ve been declined credit, don’t start applying to lots of different lenders: it may suggest desperation. They’ll wonder: is this person in financial trouble?

9. End past credit partnerships

Taking out a joint loan with a partner can affect your credit rating. So, if you’ve become separated from a partner, and they had a bad credit history, it’s important to bring that financial partnership to an end.

This ensures that your ex-partners financial situation doesn’t affect you chances of gaining credit.

10. Minimise credit usage

Credit companies are like super-sleuths. Even if you’ve got a credit card and you’re keeping up with repayment, they might consider it in greater detail. So, if you’re almost maxing out your credit regularly, they might think you’re struggling financially. After all, why else would someone need to keep maxing their card?

The solution is to stay well within the credit limit, and only use what you absolutely need. This will prove what a fiscally disciplined borrower you really are.

Bonus tip: Mitigating the Covid-19 affect

Everyone around the world is being affected by the Covid-19 pandemic. The economic impact is huge and is likely to be bigger than the 2008 crash. This makes credit repayment even harder. But there are a few things you can do to stop it from hitting your credit score.

The most important thing is take action before falling behind on repayments. Tackle this as a matter of urgency. Reach out to your lender and ask them for help. Many lenders are offering assistance for those affected economically by the crisis. They may even offer loan repayment extensions. So, contact your provider now and see what help they are offering.

The same goes for utility bill providers. There’s an increasing understanding that these are difficult times and it’s in these companies’ interests to help people out, otherwise the whole market might collapse.

The situation is continuing to evolve, so keep in touch with your credit providers, utility providers and any other company you owe money to. By being proactive and forward-thinking you might be able to mitigate damage to your credit score.

Build up your credit rating today

Right, you’ve read the article so now’s the time to take action. Set aside space in your schedule to put into practice these credit building tips.

In summary:

  1. Do everything you can to be attractive to lenders: treat them like a hot date
  2. Register to vote: they need to know who you are
  3. Check you credit report every year: they might be smart, but they can make mistakes
  4. Build your credit history: and make it good
  5. Close unused cards and contracts: a lender might wonder why you have so many open
  6. Make payments on time: the same goes for utility bills
  7. Repay your debts: if you can get ahead of schedule, even better
  8. Open new credit accounts sparingly: well, you don’t want to look desperate!
  9. End past credit partnerships: particularly if you’re ex-partner is a financial disaster zone
  10. Minimise credit usage: prove how fiscally disciplined you are

And don’t forget to ask for help during the Corona crises!

Article by Mel Dixon, freelance writer and copywriter at



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