With 37% of London and 35% of the UK’s residents being foreign-born, it’s no secret that the UK is an attractive destination to immigrate to and settle in. If you’re among that number and have recently relocated to the country, you might be surprised to learn how much credit impacts your life, so you need to know how to build your credit score as a new UK immigrant.
In the United Kingdom, establishing a good credit history and a good credit score are essential for your financial health. Credit scores can impact many areas of your life—from the cost of your monthly auto insurance premium to your ability to lease an apartment or take out a loan. Your credit history, meanwhile, might even influence whether you can land certain jobs or security clearances.
Credit allows you to spend more than you earn, so it must not be abused, and in terms of property, you can own an asset, just by depositing a fraction of the property value because you are credit-worthy. The following steps will help you start from nothing and grow.
The following will guide you on how to build your credit score as a UK new immigrant:
1. Register to vote
Registering with the Electoral Roll can give your credit a lift by proving where you live. It’s important to note that there are a number of qualifying Commonwealth citizen countries that allow newcomers to vote in UK elections, although this might not be an option for many immigrants. Credit reference agencies also love to see that you are registered. Being registered to vote in the UK means lenders can check that you live where you say you do, so it’s important to register.
2. Register to free or free versions of credit reference agencies
Creditkarma.co.uk and clearscore.com are free.
Credit Karma uses your credit profile to show you curated offers, you can see your Approval Odds before you apply, without impacting your scores. If you are new to credit, putting away as little as $10 per paycheck could help your score go up. Credit Karma offers Credit Monitoring and Insights.
ClearScore is a credit broker and was the first company in the United Kingdom to provide free credit scores and reports, along with advice to help consumers make better financial decisions for free.
Experian.co.uk has a free version too. Experian helps in finding credit cards and personal loans that you’re more likely to get while improving your credit score. You don’t need to pay to view your credit score, you are still building.
3. Use rent tracking apps
If you are a rent payer, register on Creditladder.co.uk or canopy.rent/renttracking.
Creditladder and Canopy RentTracking uses your rent payments to improve your credit position without you taking a loan or credit card. They report rent payments to the big 4 credit reference agencies – Experian, Equifax, TransUnion & Crediva. Creditladder and Canopy RentTracking securely read the rent payment from your bank and lets the credit agencies know.
4. Save with Loqbox
Loqbox improves your credit score with all three of the UK’s main Credit Reference Agencies (Equifax, Experian, and TransUnion). The credit agencies want proof that you can make regular payments. Loqbox makes it easy, automatic, and free.
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You want to build your credit score and show that you can afford to save £20 per month – so £240 over the year. At the start of the year, Loqbox loans you £240. But, the money stays locked away in your Loqbox account (hence the name). Over the year, you pay £20 a month into your Loqbox account to pay back the loan. But here comes the clever bit… Each month, Loqbox reports to the credit agencies (the companies that track and publish your credit score), that you’ve made your repayments, which increases your credit score. After 12 months, the loan is paid off and, presto – you have access to the £240 you saved and a shiny new credit score.
5. Open and Manage a Bank Account
Setting up and using a UK current account will help build your credit history because it’ll help you show that you can manage your income and outgoings effectively.
Opening and managing a current account responsibly will help your credit rating. It can actually be tricky at first depending on your ability to prove where you live—which is why it’s so important to focus on finding a permanent address. If you work for a UK Gov recognized company, try asking your HR department for an official letter stating information such as your:
Full Legal Name
Current UK address
Previous address (even if it was abroad)
How long you’ve been working for the company
Current Salary
If that option fails, consider opening a ‘new to UK’ bank account at big banks such as Lloyds. Be aware that these accounts often have higher fees and less favourable benefits, but still may be worth it depending on your specific circumstances.
Once you have done the listed above, give your credit score time to grow, and try to use no more than 25% of your credit limit while you pay promptly.
Whichever approach you choose, it’s critical to make sure the card issuer will report the account to Equifax, TransUnion, and Experian. If the card issuer doesn’t share account information with all three credit bureaus, or if its credit reporting policy only includes one or two of the credit bureaus, the account may not be an effective way to establish credit history.
Summarily, in order to build your credit score in the UK, you need to: Register to vote, Register to credit referencing companies, use rent tracking apps, save with Loqbox and open a bank account.
