Credit building cards are simply a way that you can try to build up your credit score with one or more of the main credit reference agencies using a prepay card. Simple? Well it is if you understand all about credit scores, the below will give you a top line summary of how we believe it works, but it is always worthwhile doing some reading up yourself and even checking your credit rating with one of the main providers.

What is a credit score?

A credit score is simply a way that a provider of credit assesses you to try to predict your behaviour. They will each have their own unique ‘scoring system’, so no two are identical. However, they do tend to use the same information sourced from the same places, such as Experian, Equifax or CallCredit.

What is a good score?

A good score will vary depending on the lender, as what is a risk to some is a positive behaviour to others! Not very useful but true! It also means that even if one lender rejects you, another might be happy to accept you.

What is a bad score?

Like good scores, bad scores will vary by lender. Also, a poorer score may just mean that you get offered an alternative product (generally with higher repayments).

However, there are some universal trends that may help you:

• Sometimes you may be too good to be given credit – Yes, if you pay your bill in full every month and generally behave yourself with your credit you may actually get rejected as the company will not make any profit on you!
• You may not have any record at all. If you have never bought anything on credit, they won’t be able to get any information on you to give you a score, so you are classed as too risky as they can’t predict your future behaviour.
• You may have a bad repayment history on other credit goods – You do need to behave yourself with credit products. This isn’t ‘free money’ and if you don’t repay it back then they will give you a bad mark. Do this often and the more bad marks you have, the worse your score will be. This could mean you have a County Court Junction (CCJ) or you may have been bankrupt.
• If you have committed fraud, or someone has in your name, then you will struggle – Fraud is a serious offence and definitely results in you not being very popular with banks and credit companies when looking at you in terms of risk.
• You may be acting like a 'lord a leaping' from one 0% deal to another – If you do this a lot and they spot it, then they will know that you know how to play the game so they may just reject you as they know they won’t make money from you!

How do I fix it?

Credit repairing can be done but the only way to do it is to get a product that shows the credit reference companies that you are making repayments. So you may take out one of the higher interest credit cards (they are higher as you are deemed a higher risk customer), which if you take one you need to make sure you make your repayments on time, otherwise you will get hit by a massive interest charge. Or you can try the prepay card versions.

Prepay Credit repair cards.

The only provider that offers such cards in the UK at the moment is APS. They provide a few cards with the creditbuilder option, the first and main one being the cashplus Gold card.

How does it work?

It’s a simple concept that is difficult to explain but we’ll give it a go!

‘Normal’ cashplus activeplus customers will make the following standard payments if they were to keep their card on the monthly fee option for 12 months: Maximum card purchase fee: £9.95 PLUS 12 monthly payments: £4.95

A creditbuilder customer will pay exactly the same, but APS will charge you the 12 months worth of fees upfront, as a loan.

You don’t actually get the cash, just the loan agreement that you will pay for your 12 monthly fees so:

Maximum card purchase fee: £9.95 PLUS 12 monthly repayments: £4.95

Each month that you make a successful repayment is reported to the credit reference agency and will add to your credit score.

What’s the catch?

• Well, you are tied in to paying for your card for 12 months otherwise you will be defaulting on your loan.
• They can’t guarantee you anything, as they aren’t allowed to, plus it’s your responsibility to behave well with other products in the mean time (you can’t run amok with the hope that this card will undo all the damage!).
• Otherwise, there isn’t one and you can use your card as normal.