How to increase my credit score
Get a credit card is NOT the answer. The reason people have a bad (or no) credit score is often because they're new to the country, have just turned 18, have previously fallen into arrears or are just bad with money. Getting a credit card is risky because, if you don't stay on top of your payments, it'll just damage your score even more.  Now, it sounds like I hate credit cards - but I don't, and they do have their benefits. But avoid them if possible because they can be more hassle than they're worth (ie, paying the credit back on-time, cancelling accounts when the interest comes in, moving money in and out of accounts). It's risky borrowing money from anywhere whether it's a payday lender, a bank, a credit card, etc., so use them as a last resort. If you've got your own income then that's amazing!, try not to live outside of your means and your credit score will look after (and increase) itself. It takes time to build a good credit score, but always make sure you pay the people you owe on time and the full amount. I'd stick with paying your phone provider (and any other direct debits you have setup) and avoid getting a credit card. I'd recommend Noddle to keep track of your credit score and read their FAQ on how to help build it. Unlike Experian, it's free forever so not quite as detailed... but Noddle are owned by CallCredit - one of the biggest Credit Reference Agencies in the UK so they should have the latest information on yourself. In conclusion, if you already have financial commitments like a mobile phone bill, gym membership, store cards, anything that gets paid monthly by direct debit... your credit score will increase (provided you pay the full-amount on time).   I hope this helps. PS. I don't work for any of the companies here, but I've been working in the finance sector (more specifically, short-term loans) for 3+ years now. "It's probably important to understand what a credit score is.   A credit score is your history of accruing debt and paying it back.  It is supplemented by your age, time at current residence, time at previous residences, time at your job, etc. A person with zero debt history can still have a decent score - provided they are well established, a little older and have a good job.  The top scores are reserved for those that manage what creditors consider an ""appropriate"" amount of debt and are well established.  In other words, you're good with money and likely have long term roots in the community.  After all, creditors don't normally like being the first one you try out... Being young and having recently moved you are basically a ""flight risk"".  Meaning someone who is more likely to just pick up and move when the debt becomes too much. So, you have a couple options.  The first is to simply wait.  Keep going to work, keep living where you are, etc.  As you establish yourself you become less of a risk.   The second is to start incurring debt.  Personally, I am not a fan of this one.  Some people do well by getting a small credit card, using some portion of it each month and paying it off immediately.  Others don't know how to control that very well and end up having a few months where they roll balances over etc which becomes a trap that costs them far more than before. If I were in your position, I'd likely do one of two things.  Either buy the phone outright and sign up for a regular mobile plan OR take the cheaper phone for a couple years." I've been in the UK for 3.5 years, and I have the same problem: I can't get even a small loan from my bank; no one will give me a phone contract; it's a nightmare. I have 8 direct debits, I pay everything on time and I earn decent money, but still my credit is seen as no good. I have got a few ideas for you though: Good luck! You need to get yourself a credit card, and use it regularly and also repay on time. This will help increase your credit score.  Hope you have a regular job which is bringing in money every month, but having just this isnt enough, get a credit card. Do you have the option of paying cash for the phone? To answer your question though: Essentially, you have to use credit RESPONSIBLY. That doesn't mean go get a slew of loans and pay them off. As Ratish said, a credit card is a good start. I basically buy everything with a card and then pay it off every month when the bill comes out. I actually have two and I alternate but that's getting nitpicky. It should be noted that simply getting a card won't help your score. In fact, it may go down initially as the inquiry and new account opening may have a negative effect. The positive effect will happen as you develop good payment behavior over time.  One big thing you can do, in your case, is always pay your mobile bill on time. Having a good payment history with them will go a long way to prove you are responsible.
"You should never close a credit card account unless it has an annual fee or you are overspending on it. Open lines of credit - even un-utilized ones - have a positive effect on your credit score. First of all, they increase your total credit which helps your score. Second of all, they are always ""paid on-time"" which is another benefit. Finally, they increase the length of your credit history. You can keep unused credit cards forever in your drawer. They are rarely closed due to inactivity and cost you nothing. However, if your card has an annual fee, you should close it. The potential loss to your credit score is unlikely to offset the annual fee." "Credit Scores / Rates are based on sometimes simple and sometimes quite complex Statistical Models (Generalised Linear Models, Neural Networks, Regression and Classification Trees, Mixture Models, etc).This depends on whether it is something more general like FICO or what large banks develop in-house. In any case, there are many legislation-dependent factors (Qualitative such as education, occupation security, sex, etc, payment history; or Quantitative such as age, liquidity and leverage ratios, etc).  Now, most model that are used today are propriety and closely held trade secrets. The most important reason for this is actually because of the databases that feed the models. More better quality data is what makes the real difference ... although at the cutting-edge, the mathematicians/statisticians/computer scientists that design the algorithms will make a huge difference.  Now, back to the main thing: The Credit Score/Rate is meant to be used only as an indicator for representing the Probability of Default (""How likely you are to default on your obligation towards me?"" is what it means and that is largely based upon ""Has company/he/she honoured his financial obligations?"") of a certain consumer. In more sophisticated models, they may also use your industry sector or occupational and financial security to predict the future behaviour. However, this ""Credit Score"" has meaning only in relation to a ""Credit Limit"" (""Can you pay back my $X?""). The credit limit on the other hand is defined by your income level, debt/asset, etc).   As a credit risk analyst, whether we are dealing with large corporate loans, mortgages, personal loans, etc), the principles are the same: One thing to consider is that factors considered in determining a credit score usually do not have a simple linear relationship.  Consumer Profile types such as utilisation rate are a lot more about EFFECT than CAUSE:   The most important thing is to honour your obligations, whether you pay before or after you spend makes little difference, so long as you pay in full and prior to maturity, your rate/score will improve with time. Financial Institutions have many ways to make money of everyone. Some, such as interest rates and fees are directly charged to you and some are charged to your goods-and-services providers. That has no bearing on your score. Sometimes it even makes sense to take on customers with rock-bottom ratings, lend them lots of money, and charge them to dirt. As you may well know, the recent financial crisis - with ongoing after-shocks and tremors - was the result of such practices." "I always hesitate to provide an answer to ""how does this affect my credit score?"" questions, because the credit agencies do not publish their formulas and the formulas do change over time. And many others have done more reverse engineering than I to figure out what factors do affect the scores. To some extent, there is no way to know other than to get your credit score and track it over time. (The credit report will tell you what the largest negative factors are.) However, let me make my prediction. You have credit, you aren't using a large percentage of it, and don't have defaults/late payments. So, yes, I think it would help your credit score and would build a history of credit. Since this is so unusual, this is just an educated guess." Check with your bank.  As of January, 2015, the following banks and credit unions are offering free credit-scores: Announced, in the pipeline: Source: Banks to offer FICO credit scores for free Personal Experience: I've been receiving free FICO score from my credit union for more than 6 months now. Advice: Most people have multiple bank/credit-union accounts. The FICO score will be the same whoever offers it. If none of your financial institutions offer you a free credit-score then you may opt for free services like creditkarma.com or other paid services. None of them are the widely used FICO scores, but they can be a good gauge of your credit standing. Please note that a credit-score is number summarizing your credit-report and should not be confused.  In the news: Why do you want to improve your credit score? Did you want to buy something? If not, I don't see the point in improving it. If you want to buy something, you can work towards long-term solutions like others have mentioned. In the short term, you can dispute the accuracy of all the negative line items in your report. This will give you a short boost in your credit report while the line items are being investigated as they will be taken off your credit report in the mean time. If you're looking to get a car or mortgage a home, you could time your dispute with purchasing the high dollar assets. This is a trick that does work, but you have to make your move while your credit score is the best it can be. Here are some (not all) things that can help overcome a low credit score: Getting a new job may actually hurt unless it's a substantial increase in income.  Banks usually look at salary going back 2 years, and look for consistent, maintainable income.  If you just got a new job that pays more, the bank may conservatively assume that it may not last. "There are services that deal specifically with these situations, boostcredit101.com is one I've personally had a good experience with though there are plenty out there. What they do is add you as an authorized user to a credit card with a high limit, low balance, and perfect payment history. This ""boosts"" for about 30 days while you remain listed as a user on that account, which allows you to qualify for your own card or other kind of loan in that time and helps you start rebuilding your credit. I've even heard of people doing this to qualify for a home loan, though the home loan industry is typically aware of this ""trick""." I'm not sure what raising your credit limit would do to your score in the short term.  I don't think it's a clear win, though.  Your percent utilization will go down (more available credit for the same amount of debt) but your available credit will also go up, which may be a negative, since potentially you can default on more debt. If you're interested in monitoring your score, Credit Karma will let you do that for free.