Did you know that you are eligible to start building credit once you turn 18 years old? Building credit is a gradual, long-term process, which is why it is so important to get started once you become eligible. Here are some top tips to start building credit at 18 years of age:

What are the Basics of Credit Scores and Files?

Before moving into tactics for building credit, it’s important to learn the basics of what makes up your credit or credit score. Your credit score is decided based on all the information included in your credit file which is a comprehensive look back on your financial history. It’s important to keep track of what’s on there because your credit file will follow you around for your entire adult life. All of this information is used by creditors (banks, credit unions, loan providers) to determine whether or not you’ll be approved for mortgages, credit cards, loans or even a mobile contract. 

Your credit file typically only keeps 6 years’ worth of data at a time. Your credit file is kept by organisations called credit reference agencies. You can expect them to keep the following information about you:

  • Personal information such as your name, address and former addresses and names you’ve had over the past six years.
  • How many financial accounts (bank accounts, credit cards, etc.) you’ve had in the past six years along with when they were opened. It also contains information about your first account and when it was opened.
  • Bill payments (that are proactively reported) and a note of if they were missed or late. Bills reported to CRAs are credit accounts which can include; credit cards, mobile contracts, mortgages and much more.
  • Whether you are registered on the electoral roll or not. Tip: Registering for the electoral roll can be a quick way to boost your credit score.
  • The amount of credit that is currently available to you and how much you currently use – this is called your credit utilisation ratio.
  • Who you are financially associated with (eg. who you have a joint account with).
  • If you have had a County Court Judgment (CCJ), Individual Voluntary Arrangement (IVA), default or bankruptcy along with the date that each event occurred.

How to Start Building Credit at 18

The good news is that building credit from scratch at 18 is actually much easier than improving an established but bad credit score. So if you have yet to establish yourself, here are some helpful tips to get started:

  • Get on the Electoral Roll. Registering to vote in the UK helps lenders verify that your name and address are correct. It’s one of the fastest and easiest steps for your journey towards establishing credit!
  • Open and Maintain a Bank Account. Opening and maintaining a current account with a bank in the UK helps to prove that you have an established relationship with a financial institution.
  • Apply for a credit card. This might not be an option if you don’t want to get into any form of debt, and nowadays you don’t need a credit card or credit card debt to build credit – just look at some of our other steps. Weigh your options and open a credit card from your local bank or credit union. It’s probably best to start with a secured credit card, or at least one without annual fees. Each bank has different offerings for opening a line of credit, so make sure that you read up on what you’re getting yourself into. 
  • Sign up for Credit Builder Apps. Portify’s credit builder app helps you establish and build credit by reporting your payment behaviour to all three major Credit Reference Agencies in the UK. Get started building your credit for £9/month!
  • Sign up for a Mobile Phone Contract or a Store Card. Smaller forms of credit such as a mobile contract are a great way to begin establishing credit because you may have higher chances of approval than you would for a credit card or loan. Be sure to demonstrate your ability to be financially responsible by paying your monthly bills on time and in full!
  • Make Timely Payments. When you’ve established a line of credit, whether through a loan, credit card, or another way, one of the easiest ways to continually build your credit score is to make timely payments. The same goes for all other bills. Making sure that they’re being taken care of and paid on time is one of the most important factors for building credit the right way

Related: What Credit Score do you Start With?

Personal Finance Basics Also Help Build Credit at 18

As with most things in life, it’s important to not lose sight of the basics when managing your personal finances. While all of the above tips and tricks will undoubtedly help you start building credit at 18, don’t forget about the following: 

  • Make and stick to a budget to stay on top of payments: keep track of how much money you make and how much you spend on your monthly bills. Be sure to prioritise paying rent, utilities and other bills over buying a new pair of shoes.
  • Don’t spend more than you can afford. Don’t use your credit card in ways you wouldn’t use a debit card. It’s best to start out by using a credit card to pay for 1 or 2 monthly bills or by using it for regular, small purchases such as petrol money or grocery purchases. Be sure to pay it off in full every month!
  • Pay your monthly bills on time every month. Avoid late payment penalty fees by paying all of your monthly bills on time. On time monthly bill payments are a major factor in giving your credit score a lift which is an added bonus!
  • Build up your savings and create an emergency fund. Almost everyone will encounter unforeseen circumstances at some point in their life. Creating an emergency fund can help you avoid needing to take out high interest loans or dipping into your overdraft when an unexpected emergency occurs.

Portify Can Help you Build Credit

Portify offers a simple and easy way to build your credit score with Experian, Equifax and TransUnion. Join a community of 100,000+ members who have seen their scores improve by up to 100 points in just three months. We work with all major UK Credit Reference Agencies to build your credit score.

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Lauren Robson is the digital communications manager at Portify.
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