FCA warns: Paying for credit builder products may not pay off

Our review of certain types of credit builder products found little evidence that they are effective for most consumers. 

We want consumers to be able to make informed decisions so that they can navigate their financial lives. That's why we carried out work to understand how some credit builder products operate and have been working with firms and credit reference agencies (CRAs) to drive improvements in the market. 

Here we explain the work we've done, and where consumers can access useful information on improving credit profiles, such as via MoneyHelper. 

What we looked at 

Credit builder products claim to help you build a record of making payments, which could improve your credit history and score. 

Our review focused on specific credit builder products that simply report your regular payments to CRAs with the sole aim of helping you ‘build' your credit score or history.  

These products typically do not involve regulated credit. They are closely linked to the wider credit market and tend to be marketed to people who have little or no credit history, so we looked at how they affect consumers. 

We didn't look at other products or features often described as credit builders like low-limit credit cards, rent reporting services, or services which simply explain how your credit file works. 

Our key findings 

• Effectiveness: For most consumers, there is little evidence that these credit builder products significantly improve credit scores.  

• Potential risks: In some cases, firms reporting payments on these products to CRAs can potentially misrepresent a customer's financial circumstances and help facilitate access to unaffordable credit. For consumers experiencing financial difficulty, these products are even less likely to positively affect credit scores and may reduce the amount of income available for essential living expenses.  

• Complexity and regulation: The majority of the credit builder products we looked at are unregulated and firms often fail to clearly explain their limitations and risks.  

Our work 

Based on our feedback, five firms have chosen to stop offering this type of credit builder product. Others have changed their products, business models and marketing materials.  

We continue to work with firms offering these products as we decide whether we should take further action. 

We've engaged with CRAs on new data reporting guidance to ensure that onlyappropriate information is reported that accurately reflects repayment performance.    

What to consider as a consumer 

There's little proof that these products will help improve your credit score or make it easier to get affordable credit.  

Think carefully about whether these products fit your needs and are worth the cost.   

For more information on improving your credit profile, including tips on low-limit credit cards, or for free debt advice if you're having money problems, visit MoneyHelper. 

Notes to editors:

• A London-based spokesperson is available. Please reach out to Helene Barley to organise an interview: Helene.Barley@fca.org.uk, 02070662173.
• Alison Walters, Director of Consumer Finance at the FCA, said: “We urge people to think twice before paying to use products that claim to boost your credit score. We found that certain types of credit building products don't always deliver on their promises and there are usually better, more cost-effective ways to build up your credit, and get free and impartial guidance such as from MoneyHelper.” 
• Despite these types of ‘credit builder' products being largely unregulated, as they typically don't involve regulated credit, the companies themselves may still be regulated by the FCA for other financial services they may provide.
• The FCA's work found that these products can cost anywhere between £2.50 to £25 a month depending on the firm and option customers picked.  
• It is difficult to accurately measure how many people are using these products, given some of these products are largely unregulated. However, the FCA estimates that there could be over 1.5 million people who have used these products (past and current).   
• The FCA's latest Financial Lives Survey shows that 1 in 3 adults (34%) checked their credit score in 2024, up from 28% in 2022. However, many still don't fully understand what their score means, potentially leaving them vulnerable to these types of products that may exploit this lack of understanding. 
• Concerns were first raised about these products in the FCA's Credit Information Market Study, which highlighted the potential harm to consumers and the wider credit system.