New kid on the “build your credit score” block Credito has launched a subscription service designed to build your credit profile, that is if you’re willing to shell out a monthly fee. But with a £19.99 non-refundable payment being reported to just 1 credit reference agency and the concerning prospect of taking out an unregulated loan, it’s hard to see Credito taking off just yet.
Just like many other credit building services, Credito is targeting those with poor or no credit with a service designed to build their credit score. It works as a 12-month subscription service. Each month you pay your monthly subscription fee, Credito will count this as a finance repayment and will report it back to credit reference company TransUnion.
The idea is that this demonstrates to future lenders that you’re responsible with your financial obligations. Conversely if you miss a payment, this is likely to harm your credit profile and impact your ability to get loans or credit cards, or get good rates.
Credito is a licensed credit broker that trades under Credit Intelligence, which also owns credit report service Credit Angel.
Although Credito is regulated by the Financial Conduct Authority (FCA), using its service requires you to take out an interest-free loan (0% representative APR) with an unregulated lender called Credit Builder Loans. Using unregulated loans isn’t recommended and means that you do not fall under the protection of the FCA if you have a problem.
Once you have completed the sign-up journey, Credito will set up a £239.88 unregulated loan from a company called Credit Builder Loans. Each month, your £19.99 membership will be automatically taken from the UK bank account you provided and reported to TransUnion, essentially acting as a “loan repayment”.
At the end of the 12 months, your Credit Builder Account will close and you may see an improvement to your TransUnion credit score. However, be aware that your other borrowing activities over the same period could undermine the benefit from Credito – for example, if you missed a payment on a credit card, your credit score could still go down despite using Credito.
As part of your membership, you will also have access to Credito’s guides and advice which offer to help you create a financial action plan. This action plan is aimed to give you tips on how to manage your money and identify what is currently holding you back from receiving loans from other lenders.
Although Credito is regulated by the Financial Conduct Authority (FCA), signing up to Credito requires you to take out an interest-free loan (0% representative APR) from an unregulated lender, Credit Builder Loans. This means that you can’t use the Financial Ombudsman if you have a problem.
Because there’s little risk involved (for Credito), there aren’t strict eligibility requirements. To be accepted you must:
The company recommends that you don’t apply if you’ve received 1 or more county court judgements (CCJs), or have been subjected to an individual voluntary arrangement (IVA) or debt management plan in the last 12 months.
Since Credito launched, it’s received positive reviews on customer review site Trustpilot.
Credito received a rating of “Excellent” and a star rating of 4.9 out of 5 based on over 750 customer reviews (updated December 2023). Reviewers were mostly positive, with some saying they found Credito efficient and helpful, especially with its customer service. Those who rated the brand poorly were for mixed and unique reasons.
In recent years, we’ve seen an increase in credit building initiatives that promise you a simple solution to boost your credit score. If you want to accelerate your credit score improvement, credit-boosting tools are a viable option. But when other credit-building tools like Loqbox are offering a free service (as long as you open a bank account with a Loqbox partner) that will help you build up some savings without asking you to take out an unregulated loan, Credito is falling short.
When considering credit-builder services it’s important to know all the options available to you. Before committing to a service, have a read of our top 10 tips on how to improve your credit score.
As the one who did it first, Loqbox has been dominating the credit-building market with its free tool that allows you to build up your credit score and save some money. Like Credito, each month you will pay a sum to Loqbox that will be reported to a credit bureau, but unlike Credito, Loqbox not only reports to TransUnion but also to Experian and Equifax. When the 12 months are up (or sooner), you will get all your money back.
For more alternative credit-building tools, have a look at the table below.
Having a poor or limited credit history doesn’t mean that credit cards are off the table. As long as you pay off your credit card each month, credit builder credit cards are a way to build a positive credit history with your everyday spending. Think about it, how many Costa coffees can you buy with £19.99?
If you’re on the fence about credit builder services, it is definitely worth taking a look at our eligibility checker to see what credit cards you could get approved for, with no effect on your credit score.
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