How can I improve my credit score if I am not paying bills or rent?
For those who are looking to improve credit for the sake of being able to obtain future credit on better terms, I think a rewards credit card is the best way to do that. I recommend that you only use as many cards as you need to gain the best rewards. I have one card that gives 6% back on grocery purchases, and I have another card that gives 4% back on [petrol] and 2% back on dining out. Both of those cards give only 1% back on all other purchases, so I use a third card that gives 1.5% back across the board for my other purchases. I pay all of the cards in full each month. If there was a card that didn't give me an advantage in making my purchases, I wouldn't own it. I'm generally frugal, so I know that there is no psychological disadvantage to paying with a card. You have to consider your own spending discipline when deciding whether paying with cards is an advantage for you. In the end, you should only use debt when you can pay low interest rates (or as in the case of the cards above, no interest at all). In the case of the low interest debt, it should be allowing you to make an investment that will pay you more by having it sooner than the cost of interest. You might need a car to get to work, but you probably don't need a new car. Borrow as little as you can and repay your loans as quickly as you can. Debt can be a tool for your advantage, but only if used wisely. Don't be lured in by the temptation of something new and shiny now that you can pay for later. "So you work, and give a small irregular amount to you parents.  You live with very low expenses.  Assuming you make a bit below the average salary in the UK, you should be able to save around £1000.  If you found a part time job could you save double?  I bet you could. So why do you need credit?  Why do you need a credit score? Having poor or no credit can be remedied by having a large down payment.  Essentially the bank asks, if this person could afford the payment of this loan why have they not been saving the money?  You could save the money and either buy the thing(s) you desire with cash (the smartest), or put 50% down.  Putting 50% or more down turns you into a good credit risk despite having no credit history.   In case you missed it:  why not just save the money and buy it for cash?  Why have compounding interest working against you?  Why do you want to work for the bank? Making the interest payments on loans in order to build a credit score is just silly.  It is an instance of a ""tail wagging the dog""." "Any kind of credit contract such as a mobile phone contract (could be SIM only or with a handset) would also help increase your number of accounts and demonstrate a track record of responsible management and repayments. If you have a Pay As You Go phone at present consider a SIM only contract with the same network, and if your parents currently pay for your phone consider if it would be worth switching it into your own name. Also make sure that you are registered on the Electoral Role at your permanent address and have at least a minimum payment direct debit set up on your credit card (even though you state you intend to repay in full) to make sure you don't forget a payment as this will disproportionately affect your score when combined with young age and few other accounts. Lastly ensure that you have a decent amount of ""head room"" on your rolling credit accounts like credit cards and aren't using more than 80% of the credit available to you through your monthly spending, if necessary by asking for an increased limit from your company (and then not using it)." One of the other things you could do to improve your score would be along the lines of what Pete said in his answer, but using the current financial climate to your advantage. I'm not sure what interest rates are available to you in the UK, but I currently have 4 lines of credit aside from my house. One is a credit card I use for every day purchases and like you pay off immediately with every statement. The other three are technically credit cards, however all three were used to make purchases with 0% financing. The one was for a TV I bought that even gave me 5% off if I pay it off within 6 months. That cash has been sitting in my savings since the day I bought it. I'm making regular payments on all three, but not having to pay any interest. My credit score dropped 25 points with the one as it was an elective medical expense (Visian eye surgery), so for the time the balance is near my credit limit. However, that will bounce back up as the balance lowers. My score was also able to take that hit and still be very high. If you don't have 0% (or very close) available, your better bet would be to follow the other suggestions about saving for a sizable down payment, or other every day expenses like a cell phone. You can improve your credit score simply by being an authorized user on someone's credit card account.  They don't even physically have to give you a card to use, they can just add you to the account as an authorized user and your credit score will be affected.  Be forewarned though, it can be negatively impacted as well.  Only participate in such a scheme if it's with someone trustworthy and reliable. "When you say ""promptly paying off the outstanding balance"", do you mean you pay it off literally as soon as you have incurred the debt? It is important to actually let the debt post on a statement before you pay it off. If you pay it off before the statement posts then this won't help your credit at all. Once the statement posts you can pay the entire balance off before the due date and you will still pay no interest. Assuming you are allowing the balance to actually post on your statements, you can simply continue to do this and your credit score will improve over time as your account(s) get older and you show that you are reliable. The only other way to improve your credit score is to open more accounts. In the short term this will actually hurt your score, as it will decrease your average age of account and add an inquiry. However in the mid-long term, this will improve your score as having more accounts of a variety of types is better for your score. Having an installment loan such as an auto loan or home loan is good for your score as it is different from a credit card - however you should definitely not engage in one of these unless it makes financial sense for other reasons. Don't add debt just to build your credit score. You could just open more credit cards. Like I said it will hurt your score in the short term but improve it in the mid-long term. Open cards with a variety of benefits so you can use them for different things to get better rewards." "US based so I don't know how closely this translates to the UK, but generally speaking there are three things that contribute to a strong credit score. Length/volume of credit history. This is a combination of how many accounts appear in your history along with how long they have been open.  Having a series of accounts that were maintained in good standing looks better than only having one.  Maintaining an account in good standing for a prolonged period (3+ years) is better than a bunch of short term items.  ""Ideally"" your credit history should contain a mix of term loans that were paid per contract and a few (1?) revolving account that shows ongoing use.  The goal is to show that you can handle ongoing obligations responsibly, and manage multiple things at the same time. Utilization. Or how much you currently owe vs how much people have agreed to lend you.  Being close to your limits raises questions about whether or not you can really handle the additional debt.  Having large availability raises questions about whether you would be able to handle it if you suddenly maxed things out.  Finding the correct middle point can be challenging, the numbers I have seen thrown around most by the ""experts"" is 20-30% utilization. Recent Activity. Or how much new debt have you taken on?  If someone is opening lots of new accounts it raises red flags.  Shopping around for a deal on a auto loan or mortgage before settling on one is fine.  Opening 5 new credit lines in the past 6 months, probably going to knock you down a bit.  One of the concerns here is have you had the accounts long enough to demonstrate that you will be able to handle them in the long term. One route that was suggested to me in my early years was to go take out a 6mo loan from a bank, and just place the money in a CD while I made the payments.  Then repeat with a longer term.  Worst case, you can cash out the CD to pay off the loan in an emergency, but otherwise it helps show the type of history they are looking for. All that said, I have to agree with Pete B's answer.  Don't play the credit game if you don't really need to.  Or play it just enough to stay in the game and plan your finances to avoid relying on it.  (Advice I wish I had taken long ago.)" If credit scoring works in the UK like it does in the US, then I think the fact that you own+use a credit card and pay off your everyday expenses will give you perfectly good credit.  Just keep doing what you're doing. I have seen people in the United States with very high credit scores based solely upon owning & occasionally using a credit card, paid in full and on time every month. An activity which can help improve your credit score and actually make you money is stoozing. It's a little complicated but can be beneficial to do. Using either a credit card which allows fee free money withdrawals from cashpoints or building up debt using your credit card gives you access to your credit amount. You then use a long term 0% balance transfer card to transfer the debt which you pay off at the minimum rate. It's 0% so no costs are associated except for the initial fee paid for the balance transfer amount. The money that would have been used to pay off the credit amount (or money withdrawn from a cashpoint) can then be deposited in a savings account so you are now earning interest on the credit balance. Continuing to make monthly minimum payments via direct debit will help improve your credit rating and the savings money will earn interest. (it is also available if you suddenly need to pay off the 0% card) Buy a car. Vehicle loans, like mortgages, are installment loans. Credit cards are revolving lines of credit. In the US, your credit score factors in the different types of credit you have. Note that there are several methods for calculating credit scores, including multiple types of FICO scores. You could buy a car and drive for Uber to help cash flow the car payments and/or save for your next purchase. As others have suggested, you should be very careful with debt and ask critical questions before taking it on. Swiping a credit card is more about your behavior and self-control than it is logic and math. And if you ever want to start a business or make multi-million dollar purchases (e.g. real estate), or do a lot of other things, you'll need good credit.
"Patience has never been my strong suit Unfortunately this is what you need to build up credit. The activities that increase your credit score are paying your bills on time and not using too much of the available credit that you do have. The rest (age of accounts, recent pulls, etc.) are short-term indicators that indicate changes in behavior that will make lenders pause and understand what the reasons behind the events are. Also keep in mind that your credit score shouldn't run your life.  It should be a passive indicator of your financial habits - not something that you actively manipulate.   Is there anything I can do to raise my score without having to take out a loan with interest? Pay your bills on time, and don't take out more credit than you need.  You're already in the ""excellent"" category, so there's no reason to panic or try to manipulate it.  Even if you temporarily dip below, if you need to make a big purchase (house), your loan-to-value and debt/income ratio will be much bigger factors in what interest rate you can get.  As far as the BofA card goes, if you don't need it, cancel it.  It might cause a temporary dip in your credit, but it will go away quickly, and you're better off not having credit cards that you don't need." As long as you can be trusted with a Credit Card i find that if you have a setup that uses three accounts: 1. your Credit Card, 2. 2. a high interest internet account (most of these accounts don’t have fees), 3. a savings account.  The Method that works for me is: 1st i calculate my fixed monthly bills i.e Rent and utilities and then transfer it into my high interest account.  for the month whenever i make a purchase i transfer the money into the high interest account ( this way I can keep a running balance of what money I have left to spend in the month. Then when the Credit Card bill comes I transfer the money out of the high interest account across to pay off the Credit Card ( this way you generate interest on the money which you would have spent throughout the month and still maintain $0 of interest from the Credit Card) over a year you can generate at least enough money in interest to go out for dinner on one of free flights! Your credit score is really bad, and it's highly unlikely anyone will be willing to give you a mortgage, especially if you still have bad debt showing up on your credit report. What would help? Well, clearing off any bad debt would be a good place to start. Ideally, you want to get your credit rating up above 680, though that may be optimistic here. Note, though, that bad debt falls off your credit report after a while. Exactly how long depends on your province. Note that making partial payment, or even just acknowledging the debt, will reset the 'timer', however. I mention this, though, because you mention some of your debt is from 5 or 6 years ago. It may be just about to fall off. It would also help if you can show that your credit is so bad because of mistakes from a number of years ago, but you've been making payments and staying on top of all debts for the past few years, if that's the case. Also, it would help if you had a reasonable downpayment. 20% minimum, but you'll be a lower credit risk if you are able to put down 50 - 75%. You could also consider having someone with good credit co-sign the mortgage. Note that most people will not be willing to do this, as they take on substantial financial risk. All that said, there are some institutions which specialise in dealing with no credit or bad credit customers. You pay more fees and will pay a vastly higher interest rate, but this may be a good option for you. Check out mortgage brokers specialising in high-risk clients. You can also consider a rent-to-own, but almost all the advice I've ever seen say to avoid these if you can. One late payment and you may lose all the equity you think you've been building up. Note that things may be different if you are moving from the U.S. to Canada, and have no credit history in Canada. In that case, you may have no credit rather than bad credit. Most banks still won't offer you a mortgage in this case, but some lenders do target recent immigrants. Don't rule out renting. For many people, regardless of their credit rating, renting is a better option. The monthly payments may be lower, you don't need a downpayment, you don't have to pay realtor and legal fees (and pay again if you need to move). A couple of sites provide more information on how your credit rating affects your possibility of getting a mortgage, and how to get mortgages with bad credit: http://mortgages.ca/credit-score-needed-mortgage-canada/ and http://mortgages.ca/mortgage-solutions/new-to-canada-financing/, along with  http://www.ratehub.ca/mortgage-blog/2013/11/how-to-get-a-mortgage-with-bad-credit/ "Ironically, the worst financial advice I read comes from ""bankers."" The top dozen members here can be trusted to give better advice than the average banker.  Your score is not improved by maintaining a balance, only by using the card(s) regularly. No need to carry charges month to month and pay interest, rather, have the bill reflect a 1-9% utilization.  I'd recommend Credit Karma to see how the factors affect your score. FICO scoring prefers to see a large number of accounts, low utilization, high average account age, low number of inquiries, no late payments. CK will let you see a simulated score and how it changes based on these variables." "In the other question, the OP had posted a screenshot (circa 2010) from Transunion with suggestions on how to improve the OP's credit score.  One of these suggestions was to obtain ""retail revolving accounts.""  By this, they are referring to credit accounts from a particular retail store.  Stores have been offering credit accounts for many years, and today, this usually takes the form of a store credit card.  The credit card does not have the Visa or MasterCard logo on it, and is only valid at that particular store.  (For example, Target has their own credit card that only works at Target stores.)  The ""revolving"" part simply means that it is an open account that you can continue to make new charges and pay off, as opposed to a fixed retail financing loan (such as you might get at a high-end furniture store, where you obtain a loan for a single piece of furniture, and when it is paid off, the account is closed). The formula for credit scores are proprietary secrets.  However, I haven't read anything that indicates that a store credit card helps your credit score more than a standard credit card.  I suspect that Transunion was offering this tip in an attempt to give the consumer more ideas of how to add credit cards to their account that the consumer might not have thought of.  But it is possible that buried deep in the credit score formula, there is something in there that gives you a higher score if you have a store credit card. As an aside, the OP in the other question had a credit score of 766 and was trying to make it higher.  In my opinion, this is pointless.  Remember that the financial services industry has an incentive to sell you as much debt as possible, and so all of their advice will point to you getting more credit accounts and getting more in debt." "Given the exact formula that goes into the 'Fair Issac"" calculation is a closely guarded trade secret, AND that each agency has their own formula, I'm not sure there's really any 100% for sure authoritative answer to the question in terms of which option would be best.  There are a lot of balancing factors, like how long you've had accounts, payment history over time, etc.  Stuff that is known to HURT a score can include things like closing a longstanding account.   If you have a very low interest loan (like some car companies offer now and then) I'd just make the normal payments.  If you have something at a higher interest rate, especially above 6-7%, then I'd worry less about credit score and more about how much I'm going to pay in interest and pay it off as rapidly as I could. The big key is 'never pay late' more than anything else,  Followed by how much of your debt capacity is used (which paying down any account, loan or credit card, will help), and long standing relationships (length of history)  See this (approximate) chart and notice that any early payoff is basically going lower your 'capacity used', possibly reduce the types of credit used (if it's the last loan of that type), all of which should help your score." The essential (and obvious) thing to avoid getting back into debt (or to reduce debt if you have it) is to make your total income exceed your total expenses. That means either increasing your income or reducing your total expenses.   Either take effort.   Basically, you need a plan. If your plan is to increase income, work out how.  If the plan is to increase hours in your current, you need to allow for your needs (sleep, rest, etc) and also convince your employer they will benefit by paying you to work more hours.   If your intent is to increase your hourly rate, you need to convince a current or prospective employer that you have the capacity, skills, etc to deliver more on the job, so you are worth paying more.    If your intent is to get qualifications so you can get a better paying job, work out how much effort (studying, etc) you will apply, over how long, what expenses you will carry (fees, textbooks, etc), and how long you will carry them for (will you accept working some years in a higher paying job, to clear the debt?). Most of those options involve a lot of work, take time, and often mean carrying debt until you are in a position to pay it off.     There is nothing wrong with getting a job while studying, but you have to be realistic about the demands.   There is nothing sacrosanct about studying that means you shouldn't have a job.   However, you need to be clear how many hours you can work in a job before your studies will suffer unnecessarily, and possibly accept the need to study part time so you can work (which means the study will take longer, but you won't struggle as much financially). If your plan is to reduce expenses, you need a budget.    Itemize all of your spend.  Don't hide anything from that list, no matter how small.   Work out which of the things you need (paying off debt is one), which you can get rid of, which you need to reduce - and by how much.   Be brutal with reducing or eliminating the non-essentials no matter how much you would prefer otherwise.  Keep going until you have a budget in which your expenses are less than your income.   Then stick to it - there is no other answer.    Revisit your budget regularly, so you can handle things you haven't previously planned for (say, rent increase, increase fees for something you need, etc).    If your income increases (or you have a windfall), don't simply drop the budget - the best way to get in trouble is to neglect the budget, and get into a pattern of spending more than you have.   Instead, incorporate the changes into your budget - and plan how you will use the extra income.   There is nothing wrong with increasing your spend on non-essentials, but the purpose of the budget is to keep control of how you do that, by keeping track of what you can afford. "You really don't know how credit scoring works. Let's think about the purpose of a credit score: to assess whether you're a high default risk. A lender wants to know, in this order: Utilization factors into the solvency assessment. If you are at 100% utilization of your unsecured credit, you're insolvent -- you can't pay your bills. If you are at 0%, you're as solvent as you can be. Most people who use credit cards are somewhere in the middle. When a bank underwrites a large loan like a mortgage or car loan, they use your credit score an application information like income and employment history to figure out what kind of loan you qualify for. Credit cards are called ""revolving"" accounts for a reason -- you're supposed to use them to buy crap and pay your bill in full at the end of the month.  My advice to you:"