Skip to content

Why you need a plan to build your Credit Score

It takes years to build up a credit score, start early so that you have a good score when you need it.

In the UK, a young person often starts with little or no credit history, which makes it harder to get approved for loans, mortgages, or even some phone contracts. Awareness of the importance your credit score is the first step of the plan to build a track record of responsible borrowing and repayment. Here’s a clear step-by-step guide:

This guide is part of a series that supports the over arching personal finance guide created for young people in the UK.

How to Build Up a Credit Score (UK)

  1. Get on the electoral roll

    • Register to vote at your current address, even if you don’t intend to vote. Lenders use this to verify your identity.

  2. Open and use a bank account responsibly

    • Keep your account in good standing. Avoid going overdrawn.

  3. Open a credit-building savings tool (1 Year plan)

    • Open an account

    • You take a "loan" with Loqbox, but you don't get the money! Consider the loan as a “locked” interest-free loan.

    • Then you "repay" the loan by £20 per month from your personal bank account. You basically commit to replaying the loan with £20 per month.
    • Memberships: Loqbox Lite(£0/year) or Full(£3/week)
    • Full membership provides additional features to save and boost credit score. Check Loqbox website.
    • Weekly Loqbox Membership fee. Is paid Via your debit card (Can be made monthly payments into Loqbox Save, £3 per week = £153 for year)
    • Loqbox reports your on-time re-payments to credit agencies.
    • Your credit score increases! - WINNER
    • After a year you can get the £240, for "free", if you open up a bank account with one of the Loqbox partner banks, otherwise, a £30 fee applies to transfer funds to a non-partner account.
    • Net effect of signing up with lite account is £240 saved. (or less £30, if you don't use partner bank to get the money out. )

  4. Check Your Credit Score (UK)

    • Contact the three main Credit Reference Agencies (CRAs) in the UK (See below for more info).

  5. Avoid too many credit applications at once

    • Each application leaves a “hard search” on your file. Too many in a short time suggests financial difficulty.

  6. Start with a phone contract or simple credit

    • A mobile phone contract, store account, or small subscription in your name (paid monthly) helps create a payment history.

  7. Get a starter or “credit builder” credit card 3 months after step 1 and 2.

    • Perform Soft Eligibility Checks for Credit Cards, and pick one with 90% or higher eligibility.
    • Use the credit card for small, regular purchases and pay off the balance in full each month.
    • This shows you can handle credit responsibly and avoids interest charges.
    • Start with one card, use it responsibly, then consider upgrading or applying for another.
    • Card points and interest reductions are nice, but the goal is credit history, not spend.

  8. Keep credit utilisation low

    • If you have a card, try not to use more than 25–30% of your credit limit. High utilisation looks risky.

  9. Pay everything on time

    • Direct debits help avoid missed or late payments. Even one missed bill can harm your score for years (3 to 6 years in the UK).

  10. Think about long-term accounts

    • Keeping the same bank account and phone contract for years as it shows stability, which lenders like.

Check Your Credit Score (UK)

There are three main Credit Reference Agencies (CRAs) in the UK:

  1. Experian

    • Score range: 0–999
    • Free: Sign up for Experian Free Account (basic score and report).
    • Paid: CreditExpert subscription gives more detail.
    • Access: experian.co.uk

  2. Equifax

    • Score range: 0–1,000
    • Free: Check via ClearScore app (gives your Equifax report and score updated monthly).
    • Access: clearscore.com or directly with Equifax.

  3. TransUnion

    • Score range: 0–710
    • Free: Check via Credit Karma UK (previously Noddle).
    • Access: creditkarma.co.uk

💡 Tip: Scores differ between agencies, but lenders care more about the report details (your history, accounts, and behaviour) than the number. That’s why it’s useful to check all three, since not all lenders report to all agencies.

Soft Eligibility Checks for Credit Cards

Many banks, building societies, and comparison websites let you see which credit cards you are likely to be approved for before applying. They run a soft check against your credit file to calculate your eligibility percentage (e.g. 90% chance of approval). This helps you avoid wasting applications on cards you’d be rejected for — protecting your score.

Most major banks (Barclays, NatWest, Capital One, Aqua, etc.) offer online “check your eligibility” tools.

Comparison sites (using soft searches):

How are credit scores are calculated?

In the UK, there isn’t one single "official" score. Instead, the three main Credit Reference Agencies (CRAs) — Experian, Equifax, and TransUnion each use their own scoring models. Lenders don't see your "score" directly, they see your underlying credit history and then apply their own criteria.

Scoring is built around six factors, with approximate weights in brackets:

1. Payment History (≈ 35%)

  • What it is: Record of whether you’ve paid credit accounts on time (credit cards, loans, mortgages, utilities, mobile phone bills if reported).
  • Why it matters: It shows lenders you are reliable. Even one missed payment can damage your score significantly.
How to improve
  • Set up direct debits or reminders to always pay at least the minimum.
  • Catch up on overdue accounts — defaults remain on file for 6 years, but showing recent on-time payments still helps.

2. Credit Utilization (≈ 30%)

  • What it is: How much of your available credit you are using.

    Example: £200 balance on a £1,000 credit card = 20% utilization.

  • Why it matters: Lower utilization suggests you manage credit responsibly.

  • Best practice: Keep utilization below 30% (some experts suggest under 10% for the best scores).
How to improve
  • Pay down balances.
  • Ask for a higher credit limit (if affordable).
  • Spread balances across multiple accounts.

3. Length of Credit History (≈ 15%)

  • What it is: How long your accounts have been open and the average account age.
  • Why it matters: Longer history = more evidence of how you manage credit over time.
How to improve
  • Keep older accounts open, even if unused (closing them reduces your average age).
  • Be patient — this factor grows naturally with time.

4. Credit Mix (≈ 10%)

  • What it is: Variety of credit types (credit cards, personal loans, car finance, mortgage, store cards).
  • Why it matters: Lenders like to see you can handle different kinds of credit.
How to improve
  • You don’t need every type, but having both revolving credit (like a card) and installment credit (like a loan) helps.
  • Don’t take out credit just for the sake of “mix”; focus on what’s genuinely useful.

5. New Credit / Hard Searches (≈ 10%)

  • What it is: Frequency of applications and newly opened accounts.
  • Why it matters: Many applications in a short period can suggest financial stress. Each hard search is recorded on your file for about 12 months.
How to improve
  • Use soft eligibility checks before applying.
  • Space out applications.
  • Only apply for credit you’re confident of being accepted for.

6. UK-specific factors

  • Electoral roll: Being registered at your current address boosts scores.
  • Negative markers: Defaults, CCJs (County Court Judgments), IVAs (Individual Voluntary Arrangement), or bankruptcies are severe and stay on your report up to 6 years.
  • Financial associations: Joint accounts or loans mean another person’s credit behaviour can affect yours.