Credit builder loans are designed for people who want to give their credit score a boost. You usually borrow a relatively small amount, ranging from £100 to £5,000 or potentially higher, depending on the lender, with affordable repayments. They can be particularly helpful if you’re just starting out as a young adult, new to the UK, or bouncing back after a tricky financial patch.

Unlike standard personal loans, some credit builder products don’t give you the money upfront. Instead, the funds are held back and only released once you’ve made all the agreed repayments. Others work more like a traditional loan, with the money paid out to you at the start. Some are a hybrid, for example paying half straight away and the other half after six months.

Instead of being charged interest on your loan, you might have to pay a monthly membership fee or set-up charge. In terms of providers, mainstream banks and high street lenders don’t usually offer this type of loan. Instead, they tend to be available through specialist online providers or credit unions.