What credit score do you start with?
If you’re new to credit and borrowing, you might be wondering where you stand and what your starting point is. The answer might be a little surprising: you technically don’t start with any credit score. That’s because credit scores are a representation of your financial behaviours and history, which need time and activity to develop. So if you’re just stepping into the world of credit, it's very likely that you won’t have established a credit score just yet.
How is a credit score calculated from scratch?
Once you start engaging with credit, your score begins to take shape. In the UK, credit scores are calculated by credit bureaus like Experian, Equifax and TransUnion. They each have unique scoring systems, but generally they all score you on the same list of factors like…
Payment history: this is crucial. Making payments on time can give your score a boost, while missed or late ones can have a negative impact.
Credit utilisation: using too much of your available credit can negatively impact your score. For example, if you have a credit card with a £1,000 limit and you’ve spent £800, your credit utilisation is 80%. The general rule of thumb is to use no more than 30% of your available credit.
Credit history length: the longer you’ve been using credit responsibly, the better it generally is for your score. A longer credit history provides lenders with more data to assess your reliability over time. It shows a consistent pattern of managing credit accounts.
Types of credit: lenders like to see that you can manage different types of credit responsibly, like credit cards, personal loans and even mortgages. Successfully handling a mix of credit accounts can be viewed positively.
Recent credit inquiries: opening lots of new credit accounts in a short space of time can lower your score.
How do you establish a credit score?
If you’re just starting out and don’t have a credit score yet, don't worry – everyone begins here! Below are some practical steps you can take to start building a positive credit history and establish your initial credit score:
Consider opening a credit account: consider starting with a low-limit credit card. Using it for small, regular purchases that you can pay off in full each month can be a good way to demonstrate responsible credit usage.
Pay your bills on time: and we don’t just mean your credit cards – utilities and mobile phone contracts count, too.
Check your credit report regularly: once you start building a credit history, it’s good to get into the habit of checking your credit report. This means you can spot any errors or signs of fraudulent activity early on. If you see something that doesn’t look right, report it to the credit bureau straight away.
Join the electoral roll: registering to vote is a quick and easy way to prove your identity and address, which helps lenders verify who you are and shows them you have a stable residence. It’s a simple step that really contributes to building your credit profile!
Get started with Monzo Flex
Monzo Flex Build is a handy addition to your financial toolkit. Using it responsibly by paying on time and staying within your limit could help build your credit score, as Monzo reports your activity to credit reference agencies. (Monzo Flex Build 39% APR Representative (variable), 18+, credit subject to status).
This isn't financial advice or personalised to you, and we're not recommending or suggesting you take any particular action. If you're in any doubt about what's right for you, then speak to an authorised financial advisor.
You’ll need a Monzo personal current account to apply for Flex Build. Eligibility criteria and Ts&Cs apply. UK residents & 18+ years olds only. Missed payments may negatively impact credit scores.
To open Flex Build, you may need to put down a one-time security deposit depending on your credit history.
Representative example: 39% APR representative (variable). £350 credit limit. 39% yearly interest (variable).