City Survivors: how to boost your credit score

23 March 2016

If you’re a first-time buyer, you will need to clean up your credit score.

Some 250,000 prospective first-time buyers, myself included, had taken out a Help to Buy Isa at the time of writing this column.

That’s one every 30 seconds since Help to Buy Isas launched in December 2015.

And with rates of up to 4% interest available on top of the government’s free contributions, it’s no surprise.

See Help to Buy Isas: How they work, Help to Buy Isas: Which account should I get? and First steps on the property ladder for more information on the help available. 

But while many of us are scrambling together enough cash to put towards a deposit, have you paid the same attention to boosting your credit score?
If you fail to repay your credit cards or mobile phone bills on time, it’s likely to have a negative impact on your score, which in turn could hinder your chance of getting future credit – including that ever-important mortgage.

But what many don’t realise is that having little or no credit score can be just as bad.

Dan, a 26-year-old PE teacher from Sittingbourne in Kent, is one such person hoping to buy a home for the first time in the next year or two. However, after realising he didn’t have much of a credit history, he applied for a credit card to begin building it.

After initially being rejected, he took out a free Experian trial and noticed an old university address listed.

He quickly applied to get on the electoral register at his current address, and is trying to get the old address updated.

He then successfully applied for a credit card with a lender he already has products with.If you’re worried your credit history isn’t strong enough, check your score and ensure all the details on your file are correct.

The biggest credit reference agencies, Experian and Equifax, offer free 30-day trials – just remember to cancel before the month is up, otherwise you’ll be charged £14.99 a month or £14.95 a month respectively.

Once you know what you’re working with, you can start building on it. My three top tips are:

1. Get on the electoral register. This proves your name and where you live to lenders. See for information on how to register.

2. Get a credit card. If you don’t have much of a history to your name, spending on a credit card will help build your track record and reliability for lenders.

3. Repay bills and loans in full, and on time. Missed payments won’t help your score.

For the top credit cards, see the Best credit cards for rewards and cashback and the Best 0% balance transfer, money transfer and purchase credit cards.

Many comparison sites also list credit cards that are specifically tailored towards those with bad credit scores, and some have free online tools that check your eligibility for certain credit cards, without harming your credit score.