Your credit score is a measure used by financial institutions and banks to rate your ability to pay back potential loans or credit you take based on your credit history. It measures how well you handle your financial commitments. The higher your credit score is, the better credit offers you may receive from potential lenders.

Your credit history is your repayment history on credit commitments over the last six years and is used to determine your credit score. It may include the number and types of credit accounts, amount of available credit you’ve used and number of recent credit enquiries. It’ll contain details on your:

• regular repayments
• amounts repaid
• outstanding amounts
• number of creditors

Credit Builder is available on all plans for £2.50/month to all UK-based customers with a Monese GBP account and aged between 18–75. If you’re eligible for the Credit Builder, you’ll see the option in your Monese app under the Explore section: Monese app > your GBP account > Explore tab > Credit Builder.

Right in your Monese app, you’ll be able to choose a fixed amount to repay each month, between £30 to £100. Depending on the amount you pick, we’ll use this to create an interest-free Credit Builder loan and lock this away in your Credit Builder pot. Your Credit Builder loan is equal to 12 months of your repayments. So for example, if you decide you can afford to repay £30 per month for a year, this will result in a total loan of £360 in your locked pot. This pot will only be unlocked following your last (12th) repayment.

As you pay off your interest-free credit builder loan each month, you work towards getting your Credit Builder pot unlocked. We’ll report these monthly payments to the three UK credit agencies to help build and improve your credit history and score. After a year, your interest-free loan will be fully repaid. This means you’ll have 12 months of successful repayment history recorded with the credit agencies, and your pot will be unlocked, ready to spend!

Right in your Monese app, you’ll be able to choose a fixed amount to repay each month, between £30 to £100 for a minimum borrowed amount of £360 to a maximum of £1,200.

The amount of your interest-free credit loan (i.e., what you borrow) should be driven by how much you can realistically commit to repay monthly and should never be higher than your monthly disposable income. A higher amount doesn’t necessarily mean you’ll have a better credit score. The best value of the Credit Builder lies in being able to make your repayments on time, without any financial difficulties.

If you miss a payment, we’ll need to report your account in arrears to the credit agencies. We’ll give you the ability to catch up on missed payments, but missing payments can have a big negative impact on your credit score and history. Once you miss 4 consecutive payments we will Default your Credit Builder and automatically and return all the payments you’ve made to your Monese GBP account.

Even though Monese Credit Builder is an interest-free loan, there’s still a subscription fee associated with using the Credit Builder feature. This helps us cover costs like managing your Credit Builder loan, keeping security held against your loan and the reporting services to all three credit agencies.

Due to the FCA regulatory requirement, any fees associated with the loan need to be included in APR. This is why the subscription fee is used to calculate the APR of your Credit Builder loan.

For example, if you save £50 a month, your Credit Builder will automatically issue you a £600 loan (£50 x 12). Because you’re paying £2.50 per month for the Credit Builder service, the total cost of credit is £30 (£2.50 x 12) over the term of the loan. This equates to an APR of 9.10%

Want to learn more about credit builders and our credit building tools? Find out more of our bitesize videos here.