UK Credit History: A Guide for Expats

Living in the UK as an expat comes with its own set of challenges, and building your UK credit history is one of them. Building a healthy credit history is crucial, as it can determine your ability to secure loans, rent a property, or even get a mobile phone contract. This guide will take you through the concept of credit history in the UK and offer practical tips to help you build a strong credit profile.

What is Credit History?

Credit history is a record of your past borrowing and repayment behaviour, compiled by Credit Reference Agencies (CRAs) such as Experian, Equifax, and TransUnion. Lenders and other service providers use this information to assess your creditworthiness when you apply for credit, lease a property, or sign up for a new service.

Your credit history is summarised in your credit report, which lists details of credit accounts, outstanding debts, payment history, and public records such as bankruptcies or County Court Judgements (CCJs) against you. Based on this information, CRAs assign you a credit score, which serves as a numerical representation of your creditworthiness.

Steps to Build Your Credit History in the UK

As an expat, you may find it difficult to access credit at first because you don’t have an established credit history in the UK. Here’s how you can begin building your credit history:

  1. Register on the Electoral Roll: Registering to vote helps establish your identity and proves your residency at an address. This is an important step, even if you don’t plan to vote.
  2. Open a UK Bank Account: A UK bank account helps establish financial stability and is essential for paying bills and managing your finances. Ensure you select a bank that reports to the CRAs.
  3. Apply for a Credit Builder Credit Card: Credit builder credit cards are designed for people with no or poor credit history. They come with lower credit limits and higher interest rates, but they are useful for demonstrating responsible usage and on-time payments.
  4. Pay Your Bills on Time: Consistently paying your bills, such as utility and mobile phone bills, contributes positively to your credit history. Some providers report to CRAs, while others don’t; still, late payments can lead to debt collection agencies getting involved, which will negatively impact your credit.
  5. Use Direct Debits: Set up direct debits for your regular bills to ensure timely payments, which will reflect positively on your credit report.
  6. Keep Your Credit Utilisation Low: Credit utilisation refers to the percentage of available credit that you are using. Aim to keep it below 30% to demonstrate responsible usage and avoid negatively impacting your credit score.
  7. Avoid Multiple Credit Applications: Making too many credit (loan) applications within a short period signals a higher risk to lenders, which can negatively impact your credit score. Space out your applications and only apply for credit you actually need.
  8. Check Your Credit Report Regularly: It’s essential to monitor your credit report regularly to ensure the information is accurate. You can request a free copy of your credit report once a year from each of the three main CRAs or use a service like checkmyfile to see data from all three CRAs. If you discover any errors, report them immediately.

Final Thoughts

Building your UK credit history may seem daunting, especially if you’re starting from scratch. However, following these practical steps and practicing good financial habits will help you establish a solid credit profile over time. Remember to be patient, as building a strong credit history takes time and consistent effort.

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