Will a credit builder card actually build my credit score?
Keeping your credit score healthy is important as it determines if you can qualify to get a loan, mortgage, or even a phone contract; it may also seriously affect your interest rates.
Tackling this subject may seem daunting at first, but it’s something you can quickly learn about and start improving today. If you don’t know your current credit score, you can begin with reading up on how to check your credit reports.
There are numerous reasons why your credit score may be low – from having a bad debt repayment history to simply not having any credit history at all, and there are many individual components that affect – positively, or negatively – your score. In one of our previous blog posts, we wrote about fastest way to better credit score and how to repair or improve any bad credit history that might be affecting it.
One way to build your credit history is to apply for a credit card, and use it responsibly.
But some people might find themselves in a loop – they can’t get a credit card to build a high credit score without an existing good credit history. Some lenders try to solve this issue, offering their customers credit builder cards. These are a tool designed to help you build a credit history from scratch, or to improve your credit history. However these may come with a hefty price – higher-than-usual interest rates and lower credit limits, so it comes as no surprise that some people don’t find this option appealing, being scared away by the idea of potential debt or having to pay huge interest fees.
Let’s assume you have no credit history, or that your score at the moment is not very high and you would love to change that, but you don’t want to get a credit card or a credit builder card – what are your alternatives?
You might want to try getting a new monthly phone contract, or as an example, a small loan on your next electronic purchase. These can help you boost your score, assuming you pay them back regularly and in time. There are a few downsides to this method, though:
- You may not need a phone contract or a loan at the moment
- You might have to pay interest on your loan, which will cost you money
- You might be rejected from getting a contract or a loan if your credit history is bad, which in return can mess up your overall credit score
If you’re looking for an easy, free option, you can open a LOQBOX account with us and improve your credit score by saving your chosen monthly amount for a year. It doesn’t cost you a penny, and you can start as soon as you want. The great thing about getting your own LOQBOX is that anyone can do it, no matter how bad their credit score is – you won’t get rejected, and your credit score will steadily improve over the next year! The only obligation you will have will be paying your chosen amount – as little as £20 – each month and making sure these are on time (we collect them automatically so there isn’t anything for you to do).
This post was written and compiled by the credit experts behind LOQBOX – a completely free way to build your credit history by saving a little each month. To sign up or read more about the clever way LOQBOX works, head to LOQBOX.co.uk.
This is part of our Two-minute Money blog series – unlocking the secrets of the financial system, two minutes at a time.