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How can I start building my credit score? Which cards and accounts are best?

By Mike Narouei, Content Producer at Boring Money

11 July, 2019

It’s a chicken and egg thing… to borrow money, you need a good credit rating. But to get a good credit rating, you need to borrow. Or do you? Here’s how to make that first step, and some options for your first credit card and graduate bank accounts.

You’ve left the nest, you’re ready to take on the world, and you’re about to realise that being self-sufficient costs a bomb. That’s why so many people turn to credit cards, loans and overdrafts for a financial helping hand. But to get the best deals, you first need to build up your credit rating (a score used by lenders to determine how safe it is for them to lend you money.) Thankfully, it’s not as tricky as you may think…

How to build your credit rating from scratch

Some really easy first steps

You may find you’re already doing some of these suggestions, which is great. If not, now’s the time to start. Even a small record is better than none at all when it comes to getting credit.

  1. Register to vote at the address you currently live at – whether you intend to vote or not.

  2. Make sure your mobile phone contract is in your own name and registered to your home address (pay-as-you-go doesn’t count, I’m afraid)

  3. Apply for a modest overdraft on your bank account that’s small enough for you to easily pay back every month. Try to use it only in emergencies instead of seeing it as extra spending money.

More powerful ways to boost your credit rating

The next few tips involve further borrowing, but first I’d like to say from personal experience that you should only follow them if you trust yourself with money! When I was at university I took out credit cards and huge overdrafts because they were offered to me by my bank, but I wasn’t responsible. I'm sure I was a minority, but I splashed the cash, borrowed more than I earned, and ended up damaging my credit rating. Future Jamie was not pleased. So please only ever borrow what you know you can pay back!

So, if you think you’re responsible enough:

  1. Apply for a credit card and spend small amounts every month. But also make sure you pay off the balance as soon as you get paid.

  2. Try not to reach the credit limit on your credit card – having access to credit but not using it shows you have discipline.

  3. Never miss a monthly payment. Ever! Even if you’re only paying the minimum each month, that’s far better than getting a fine or showing you can’t uphold your commitments. This applies to all credit products – loans, cards or anything else.

Compare options for your first credit card and graduate bank account

If you decide to go down the credit card route, you obviously want to get the most bang for your buck. Two good options are:

Cashback credit cards, which earn you a small amount of money while also building your credit rating.

Credit cards with reward points, which earn you money off at a specific retailer each time you spend with them.

Some of the best cashback credit cards with no monthly fees

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Some of the best reward points credit cards with no monthly fees

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Some of the best graduate bank accounts with overdrafts

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We hope these tips and tables help. And remember... don't spend it all at once!

If you've found this useful, you might also appreciate the tips and guides for our Rebellious Renters ( money tribe. Check it out and get your finances on your side.