Building your credit score is essential if you want to qualify for a mortgage or other large loan. Achieving a good credit rating doesn’t happen immediately, so the sooner you get started building one, the better.

For younger people, the first steps to a good credit score are making smart financial decisions, and demonstrating sound money-management. Read on for some tips on building your credit score as a young person.

1. Set Up a Bank Account

A quick and easy way to start accumulating a good credit score is to have a bank account. If you can manage a current account well, then you will demonstrate financial responsibility. To do this, you will need to ensure there are sufficient funds in your account to pay your bills without going overdrawn.

Having said that, using an arranged overdraft facility can build up your credit score. You can use your overdraft in the same way you would a credit card, but make sure to pay it off in full before the end of the interest-free period.

Even without having an arranged overdraft, your credit score will improve if you manage your bank account correctly.

2. Make Sure You Are Registered To Vote

This tip may not seem like the most obvious way to improve your credit score, but it will help greatly. One of the largest credit agencies in the UK, Experian, says that being on the electoral register improves your credit score. 

The reason it has a positive effect is that the electoral register is where companies look when they want to verify the personal information of loan or credit applications. If your details do not appear on the register, getting credit is more challenging and, therefore, it is harder to improve your credit score.

If you are a non-UK national applying for credit in the UK, you should contact each of the three major credit agencies (TransUnion, Experian, and Equifax) explaining why you do not appear on the electoral register.

3. Pay Your Bills On Time

This statement applies to all your bills, but most importantly, your utility bills (phone, gas, electric, water) and other bills that you have a standing contract to pay. Having a company report a missed payment or resorting to getting their money through the courts will negatively impact your credit score. So, it is worth reiterating, pay your bills, and pay them on time.

4. Take Out a Credit Card

You might not be able to get a credit card immediately, because you have no credit history. However, the majority of banks will let you have a credit card after a few months of banking with them.

There are also options available to get credit-builder cards. These are specifically designed for young people to build their credit scores. Credit-builder cards generally have low credit limits, and high-interest rates.

Either credit cards or credit-builder cards will build up your credit score if you use them sensibly. Sensible use means paying them off in full at the end of each month, and only using a small proportion of the credit limit. So, if your card’s limit is £1,000, only use around £200-250. Doing this demonstrates that you are spending responsibly, and can manage your finances, which will boost your credit score.

5. Have Patience

As we’ve stated several times now, you cannot get a good credit score immediately; it takes time and requires patience. It is not a good idea to try to build up your credit score too fast. If you take out too many loans, or loans that are too large, this can negatively impact your credit score. 

Following these steps, being patient and taking your time over building your credit score will see it improving in a few months. Hopefully, you will have plenty of satisfaction as you see your credit score get better, particularly if you started from zero.