People should ‘think twice’ before paying for some credit builder products – FCA

People are being urged by the City regulator to “think twice” before paying for some products that claim they could boost their credit score.

The Financial Conduct Authority (FCA) said there is “little proof” that some credit builder products would help people improve their credit score or make it easier to get affordable credit.

It said people should carefully consider whether products fit their needs and are worth the cost.

Credit builder products claim to help people build a record of making payments, potentially helping them to improve their credit history and score.

The FCA’s work found that products can potentially cost between £2.50 to £25 a month, depending on the firm and option customers picked.

Its review focused on specific credit builder products that simply report regular payments to credit reference agencies (CRAs), with the sole aim of helping people to build their credit score or history.

Such products typically do not involve regulated credit, the FCA said. They tend to be marketed to people who have little or no credit history.

The regulator did not look at other products or features often described as credit builders, such as low-limit credit cards, rent reporting services, or services which simply explain how someone’s credit file works.

The FCA highlighted potential risks, saying that in some cases, firms reporting payments 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, the regulator said.

The FCA said the majority of the credit builder products it looked at are unregulated and firms often fail to clearly explain their limitations and risks.

The regulator said that, based on its feedback, five firms had chosen to stop offering this type of credit builder product. Others had changed their products, business models and marketing materials.

The regulator said it is continuing to work with firms offering these products as it decides whether it should take further action.

It has also engaged with CRAs on new data reporting guidance to ensure that only appropriate information is reported that accurately reflects repayment performance.

The FCA suggested that people should visit the Government-backed MoneyHelper website for information on improving their credit profile, including tips on low-limit credit cards, or for free debt advice if they are experiencing money problems.

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 many credit builder products being unregulated, as they typically do not involve regulated credit, the companies themselves may still be regulated by the FCA for other financial services they may provide.

The regulator said it is difficult to accurately measure how many people are using these products, given some are largely unregulated.

But the FCA estimates that there could be over 1.5 million people who have used these products, either in the past or currently.

The FCA’s latest Financial Lives Survey found a third (34%) of adults checked their credit score in 2024, up from 28% in 2022.

However, many still do not fully understand what their score means, the regulator said.

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.

Published: 10/11/2025 by Radio NewsHub