Credit Improver guarantees to boost your credit rating by taking out a one-three year loan. Is this really the best way?
A new product has hit the market that ‘guarantees’ it will improve your credit rating or you will get your money back.
Credit Improver Guaranteed works by helping people create a payment history.
Customers buy the ‘Credit Improver Book’, described as a “glossy, coffee-table-type book that tells them everything they need to know about credit scoring and building a good credit profile.”
But, rather than paying for the book upfront, you pay via monthly instalments over a period of one to three years.
If you opt for a two or three year loan you will get a new book each year. These books are also about credit ratings – suggesting they haven’t covered it all in the first book.
These regular monthly loan repayments enable you to start building up a good credit score - but at a terrific cost.
You pay £14.99 initially followed by £9.99 a month. So, if you opt for the three-year loan you will have paid £364.64 for a book.
When you finish paying off the interest-free loan, your credit score will be compared with the level it was at the beginning (you provide a screengrab or PDF of your credit score at the start).
If your credit rating hasn’t improved Credit Improver will refund all your money.
The product is aimed at people people who have a poor credit history and those aged 18-35 who haven’t built up a good credit rating yet.
“So many young people are stuck in a credit Catch 22: namely, to have any chance of getting credit, they need to show their ability to service credit," says Thomas Eyre, founder and CEO of Credit Improver.
"And even in the rare event they can get credit, the interest rates charged are often so punitive that they risk becoming mired in debt.”
Better options available?
Before you buy, it's worth noting that there are far cheaper – even free – ways you can build up a good credit history.
Firstly, there are numerous articles available on LoveMONEY that will give you tips on how to improve your credit rating. Try these two for a start: How to repair your credit rating and 10 astonishing lies about credit ratings.
Secondly, if you want to build up a credit payment history you don’t have to hand over hundreds of pounds to a company. Apply for a credit card and repay the balance in full each month instead.
Take a look at these credit builder credit cards for more.
If you are worried about building up huge debts, set a very low credit limit on the card – and inform the company you don’t want automatic limit increases – and set up a direct debit to pay it off in full each month.
As long as you pay off all the balance each month you won’t be charged any interest so this is a completely free way to build up your credit history.
But, before you apply for a credit card use a comparison service that will tell you your likelihood of being accepted for a card.
That way you won’t further damage your credit rating by applying for numerous cards and being rejected.
Credit card options
Several companies offer credit builder credit cards designed for people who have a poor, or sparse, credit history.
Barclaycard Initial – This card can be used for contactless payments and offers 0% interest on purchases for the first three months after that the interest is 34.9% APR though so make sure you pay off your balance in full.
Vanquis Chrome 24.7% Credit Card – This card charges, as its name suggests, charges 24.7% APR – one of the lowest for credit builder cards, but it is still hefty so clear your balances before interest is charged.
Capital One Balance Classic Credit Card – If you already have credit card debt but are struggling to repay or move it onto one of the headline grabbing balance transfer cards this could be the card for you.
It has a six-month 0% period on balance transfers and accepts some applicants who have poor credit ratings or a history of County Court Judgements (CCJs).
But, the interest rate on purchases (and balance transfers after six months) is 34.9% APR so make sure you manage your debt carefully in order to avoid being charged interest.
Compare even more credit builder credit cards with loveMONEY today
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