How to improve your credit score in the UK

If you emigrate to a place like the United Kingdom and haven’t lived there before, chances are you’ll be starting from scratch with your credit history.

Effectively, you’ll be a like a student out of university – no credit history with any providers considering you adding a premium to their credit and insurance products to mitigate this ‘risk’.

It’s an unfortunate predicament to be in, particularly if in South Africa you have built up a good credit score and are used to owning your own home, having access to car finance and a low interest rate on your credit card.

The good news is that there are things you can do to expedite the route to a good credit score. Here Garrett Cassidy, vice president of credit at Monese, offers advice on how to do just that.

Estate Living (EL): What kind of credit score can people first expect when arriving in the UK? 

Garrett Cassidy (GC): “Unfortunately, if you’re new to the UK, you probably won’t have credit history. This means you won’t have a credit score and you could struggle to get credit. Access to credit is a persistent and real issue in the UK, especially for those new to the country. The impact is well beyond getting loans. Landlords, utility companies and mobile phone providers also use credit score and history to make decisions on tenants and customers.

EL: What actions can people take to make yourself ‘visible’ to credit providers?

GC: As you start to settle into your life in the UK, certain things like registering with your council to vote or to pay council tax, will improve your credit footprint and make you visible to UK credit reference agencies (Experian, Equifax, etc). However, this is still quite an early stage. These actions alone are unlikely to be enough to generate a healthy credit score, so you can start to borrow. It can take months, or even a year to build up to this. We always recommend people start out as quickly as possible.”

EL: What can they bring with them from the banks they currently bank with? Do any letters, etc., help?

GC: “Your credit history doesn’t travel with you, sadly. You really do have to start from scratch when you move. There’s very little that you can bring from your current bank that will help with your credit score in the UK.”

EL: Does it help to open and use an international bank account? Or is it worthwhile to open a UK bank account as soon as possible?

GC: Getting a local UK account is a must if you need to get paid or make local payments. There are many options open to you in the UK. Mobile money accounts like Monese are multi-currency, quick and easy to open, and do not require any credit checks. This is very helpful if you’re new to the country.

Some traditional UK banks require soft credit checks to open an account. This is often because accounts come with overdrafts or other credit facilities. This can be prohibitive to newcomers to the UK, who have no credit score.

It’s also important to keep in mind that not all bank accounts report to the UK credit reference agencies. This is another good thing to do if you’re keen to improve your credit footprint. Monese will be launching reporting to the UK credit reference agencies in the coming months, so our customers can enjoy easy account opening and build their credit footprint as they go.

We recommend anyone planning to relocate does their research and works out what the best option is for them.

EL: What type of services can people use to get improve their credit score/get access to credit? 

GC: A credit builder product is a good starting point. Also, any regulated credit service can also help, for example, a mobile phone contract. The only snag is you might need a deposit upfront if you’re new to the UK.

You could also take out a specific secured credit card, but you might be asked to hold your limit as collateral in cash. It’s important to check the fine print if you’re considering any credit card and the rate you will be expected to pay on any credit card.”

EL: Finally, what mistakes do people make in their attempt to improve credit scores?

GC: Taking out payday loans is a common misconception. Although regulated, a payday loan is seen as an extreme need for credit and is therefore viewed negatively by the credit reference agencies and lenders.”