How to go about building credit history in the UK?

Question

I understand that if I move to another country, my good credit history in the United States will not be recognized. But this leads to a chicken-and-egg issue: if no one will give me credit, how can I develop a good history in the new country?

Specifically, if my company moves me from the US to the UK for an assignment, I will want a sterling-denominated credit card and perhaps even to buy property. I would have a temporary address and proof of employment and income, and with that would be able to open an account with a UK bank. But what next?

I am advised to register for the electoral roll, but this does not apply to me as an American citizen. Next, I am advised to apply for credit I am likely to obtain, but none of those relocation guides I've seen actually describe what credit that might be— credit card? Line of credit? Margin account with a brokerage?

What is the best type of credit that an American expat should apply for to start building a credit history in the United Kingdom?

Answer 1

Having done the reverse - moved to the USA from the UK, I feel your pain. I moved in 2008 when banks were crashing.

The primary way I found of doing this was to use a Secured Card, and I found an example of one from Capital One UK (but I'm sure there are others):

http://www.capitalone.co.uk/support/faqs-secured-card.jsf

With a secured card, you give them the money to cover the maximum credit limit on the card, so if you want a limit of 2000 GBP, then you write them a cheque for 2000 GBP. You can then use the card, pay every month as usual, and build up a credit history.

The card I used, after a year of perfect payments they paid me back the security sum, with a small amount of interest.

Other options include having a stable resident address (so avoid moving house frequently). We also managed to get a mortgage (by having a very large deposit and demonstrating an immaculate UK credit history), but even then I had to go through a specialist broker.

So I would recommend that you go to the effort of documenting your US credit history, with a company that also has a UK presence, e.g. Equifax.

This is all painful, but it will slowly change for you if you avoid ever missing a payment.

Answer 2

There are services that will produce a credit history report based on the country you used to live in. Experian or credit safe, as a couple. They cost quite a bit, about £50~£250 per search, based on the criteria you need your check to be carried out.

Depending on what you need to do, just moving in to UK is not that bad. You can get a mobile phone contract, 12-24 months (this gets your credit score rolling after 3 months) and a land line like British Telecom or Virgin Media also contribute.

You can further progress your credit score by applying for small credit cards. They will do a credit search that will be noted on a fraud system but once you get a credit card, even a £200 limit this really get your score going! You have to be fully employed for at least 3 months with payment slips and bank statements ready.

If you are planning on buying a car or a house on credit you will defiantly need to do an advanced credit search based on the country you lived in before. But you can overcome this by being fully employed for 3 years and have an immaculate credit score. (This is how I bought a house.)

Bureaucracy is really difficult in UK for foreign nationals. I had to do allot of arguing and talk to the right people (not sales guy on the phone but the underwriter directly and dispute declined loans - providing more evidence that you are low risk- this usually means at least 3 years of full time employment history but for cars 1 year is enough)

Having large amount of secured money in your bank account will also help convince creditors if you want to buy a house or a car. Say you sold your home/car in the US.

Answer 3

For buying property, not having indefinite leave to remain (equivalent status to a green card) will mean many mortgage deals aren't available to you, so you'll end up paying a higher rate of interest than most people. Should you decide to buy, check your desired bank's mortgage lending criteria before applying - or go through an independent mortgage broker, who should be able to steer you towards banks that will consider your case.

For a bank account, I used Citibank UK, who as I recall gave me a bank account based solely on a check of my US credit history. The other post linked above probably has better options though (Citibank has high fees and incomprehensible overseas call centers).

Answer 4

The first step is to find a place to stay. It's tempting to rent an "all inclusive" place to stay, but that immediately creates problems for proof of identity and your credit score. See below for more details.

The second step is to get a bank account. See How to open up your first UK bank account without proof of address? here.

The third step is to sign up with utility providers. You should try and organise at least two of the following:

• Council Tax payments (requires renting a place to stay)
• Water and Sewage
• A landline (through British Telecom / BT or others)
• Gas and electric
• A mobile pay-monthly contract, if possible. Note that when I first arrived, I could only get a pay-as-you-go phone, despite the suggestion of others on this question.

The above will all slowly build a credit score for you. Make sure that you do not sign up for "online billing" for the first few months: you are going to need physical paper statements so you can use them as proof of identity.

There are certain credit card companies that specialise in people with bad or no credit score. http://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards has some references. I've never used these cards, but they may be an option.

Without a doubt, though, the biggest improver to one's credit score is getting on the voter's roll. I know this isn't an option for you, but many commonwealth citizens don't know that they can vote in the UK elections if they live in the UK. http://www.aboutmyvote.co.uk/who_can_register_to_vote.aspx has more info there.