November 28, 2024
How to Start Building Your Credit in Your 20s
Building your credit score is important - learn how to get started with Boshhh Mobile
Building credit in your 20s is more than just a financial milestone—it's a stepping stone to achieving your dreams. Whether it's renting your first flat, buying your dream car, or traveling the world with a credit card that earns you rewards, a good credit score is essential. The earlier you start, the better your chances of enjoying financial freedom later in life.
If you’re unsure where to begin, don’t worry! This comprehensive guide will provide you with actionable steps to start building your credit today.
Why Does Credit Matter?
Your credit score is like a financial report card. It tells lenders, landlords, and even employers how trustworthy you are when it comes to managing money. A good credit score can help you:
Secure loans with lower interest rates.
Get approved for credit cards with better perks and higher limits.
Rent a flat without needing a guarantor.
Access better deals on utilities and mobile contracts.
On the flip side, a poor or nonexistent credit score can limit your opportunities, making life unnecessarily expensive and complicated.
Understanding Credit Scores
In the UK, credit scores typically range from 0 to 999, depending on the credit agency. Here’s a quick breakdown of how scores are categorized:
Excellent (800–999): You’ll have access to the best rates and deals.
Good (700–799): Most lenders will approve your applications.
Fair (600–699): You may still get approved but with higher interest rates.
Poor (300–599): You’ll struggle to find lenders willing to work with you.
Knowing where you stand is the first step. You can check your credit score for free with services like Experian, Equifax, or ClearScore.
Step 1: Start with a Credit Card
Why Credit Cards Are Important
Credit cards are one of the easiest ways to build credit because they create a history of borrowing and repayment. When used responsibly, they can boost your score over time.
How to Get Started
Apply for a secured credit card: These cards require a deposit as collateral, making them easier to get approved for.
Use it for small, regular purchases: For example, you could use your card for groceries or a Netflix subscription.
Pay your balance in full each month: Avoid carrying a balance to sidestep interest charges.
Step 2: Explore Alternative Credit-Building Tools
If you’re not ready for a credit card, there are other ways to start building credit:
Take out a small loan: Consider financing a laptop, phone, or another essential item. Just make sure you can afford the monthly payments.
Sign up for a credit-builder account: Some banks and financial apps offer accounts designed to help you build credit.
Pro Tip: Boshhh’s SIM-only plans are a great way to establish a positive credit history. By paying your bills on time, you show lenders that you’re reliable.
Step 3: Become an Authorized User
If you have a trusted family member or friend with good credit, ask if they can add you as an authorized user on their credit card.
You don’t need to use the card or even have access to it.
Their positive payment history will reflect on your credit report.
This is a low-risk way to start building credit, especially if you’re nervous about managing your own credit card.
Step 4: Pay Your Bills On Time
Your payment history is one of the most significant factors in determining your credit score. Even one late payment can hurt your score, so it’s crucial to stay on top of your bills.
Which Bills Matter?
Not all bills directly affect your credit score, but missed payments can end up in collections, which will show up on your credit report.
Prioritize:
Credit card payments.
Loan repayments.
Utility bills.
Mobile contracts (like Boshhh SIM plans which are all credit building!).
Set up automatic payments or reminders to ensure you never miss a due date.
Step 5: Keep Your Credit Utilization Low
Credit utilization is the percentage of your credit limit that you’re using. For example, if your credit limit is £1,000 and you’ve spent £300, your utilization rate is 30%.
Why It Matters
A lower utilization rate indicates to lenders that you’re not overly reliant on credit, which is a sign of financial responsibility. Aim to keep your utilization below 30%.
Step 6: Monitor Your Credit Report Regularly
Why You Should Check Your Credit Report
Errors or fraudulent activity can damage your score, so it’s important to review your credit report periodically. Look for:
Accounts you don’t recognize.
Incorrect payment histories.
Discrepancies in your personal information.
If you spot an error, dispute it with the credit bureau immediately.
Step 7: Avoid Common Credit Mistakes
Opening Too Many Accounts at Once
Each time you apply for credit, a lender performs a hard inquiry, which temporarily lowers your score. Space out your applications to avoid this issue.
Carrying High Balances
Even if you pay your balance in full each month, consistently maxing out your credit card can harm your score.
Closing Old Accounts
Length of credit history is a factor in your score. If you close your oldest account, you could shorten your credit history and lower your score.
How Boshhh Can Support Your Credit Journey
At Boshhh, we understand the unique challenges young adults face when starting their financial journey. Here’s how we can help:
Credit Building SIM Plans: Our SIM-only plans are cost effective for those with poor or no credit history, perfect for those who want to build credit without overcommitting.
Automatic Payments: Simplify your life with easy, on-time bill payments.
Customer Support: Have questions about credit? Our team is here to guide you every step of the way.
With Boshhh, you’re not just getting a phone plan—you’re taking your first steps toward a better financial future.
Building Credit Takes Time—Be Patient
Rome wasn’t built in a day, and neither is a stellar credit score. By following these steps consistently, you’ll set yourself up for long-term success.
Quick Recap of Steps:
Get a credit card or secured card.
Explore loans or credit-builder accounts.
Become an authorized user.
Pay bills on time, every time.
Keep your credit utilization low.
Check your credit report regularly.
Avoid common pitfalls.
Ready to Get Started?
Starting in your 20s gives you a major advantage. The habits you build now will benefit you for decades to come.
Let Boshhh be your partner in building a brighter financial future. Visit Boshhh.com today to learn more about our services and start your credit journey on the right foot.
