Do I need a credit score? I had one before, can I take it with me?

To borrow money in the UK, you usually need a credit score — regardless of whether you're a UK resident or have just arrived. These scores are used by most lenders in the UK, and elsewhere, to gauge how likely you are to repay a loan and are based on you've repaid loans in the past.

Unfortunately, even if you had a credit score where you previously lived, it won't travel with you. As such, you may have to start from scratch, even if you had an excellent credit score back home. You'll need to build a credit score in the UK to prove to lenders that you can borrow and repay loans reliably.

Having a blank credit score is known as having a thin credit file. A thin credit file can often lead to a loan rejection because there's not enough information to prove how well or badly you borrow money. Without this information, many lenders aren't willing to take the risk and lend to you.

However, there are new lenders, like Abound, that simply require 3 months of work history to apply for a loan. You can see how it works here.

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How likely am I to be accepted for a loan?

Both UK residents and those who have just moved to the country generally need to have a credit history to show how they deal with borrowing and making loan repayments. The longer your credit history, the more lenders have to go by, and the more likely you will be accepted for a loan.

When you first move over, you may find it very challenging to get a loan because of your thin credit file. Lenders who do approve a loan on this basis will likely charge extremely high interest rates or additional fees. This is particularly the case with unsecured personal loans for poor or thin credit, as there will be no collateral.

Some lenders, including Abound, do not require a long credit history for you to qualify for a personal loan. Instead, they need to see your transaction history and proof that you have a regular, stable income. For example, at Abound, we ask for 3 to 6 months of transaction data in order to make a decision on your application.

If you are not a UK Citizen, you will need to show that you are a UK resident. We will ask you to show us your Biometric Residence Permit or valid visa page, or send a "share code" from the UK Government service, so we can verify your residence status.

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Building up your credit score after moving to the UK

Although it can be frustrating, there are a number of ways to build your credit score once you move to the UK. A good credit score means you're more likely to have your loan applications accepted. However, it also makes it easier to apply for mortgages and get better interest rates on credit cards.

• If you're eligible, get on the electoral roll — this will help lenders and creditors feel confident that you are who you say you are.
  
• You'll need a fixed address to apply for any financial support in the UK.
  
• Try to find employment as soon as possible to show you have a regular income.
  
• If possible open a UK bank account to receive your salary and pay your bills. You may find that your previous bank has branches in the UK, in which case you can use that and apply for an account here.
  
• Put household bills in your name if possible, and set up direct debits to pay them.
  
• You may still be able to get a credit card. These will most likely be high-interest at first. However, even with the high interest rates, a credit card can help you build up your credit score. It's essential to use them very carefully to avoid the risk of damaging your credit rating.
  
• You can use a credit builder product. For example, Portify helps you build credit for £5 a month.
  
• Another option is to get a store card. If you have a shop you frequently use, this can be a good starting point. As with credit cards, it's vital that you pay the card off each month.
  
• If you apply for a loan or credit card and face rejection, don't keep applying repeatedly — this can actually damage your credit rating.
  
• Make sure you check your credit report regularly so you can see any progress you've made and give you an idea of how much more credit you need to build.

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Are there any alternatives?

If you're really struggling to build your credit score and get a loan, there are a few other things you can try. Some may work best for you and your situation, and some may be less feasible — everybody's situation is different.

Extra work

​You could try asking your employer for extra hours or take on part-time work.

Selling surplus items

Selling any goods that you and your family don't use could bring in some extra money to help make ends meet.

Government benefits

You may be eligible for support from the Government. For example, if you're an EEA or Swiss citizen, you may be able to claim UK benefits and a state pension.

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The problem with traditional credit scoring

Traditional credit scoring does not always reflect actual affordability, particularly for those who have just moved to the UK. You may have an excellent credit score in your own country and still be rejected for loans over here. This can be incredibly disheartening and frustrating for new residents and lead to stress and cycles of debt.

That's why, we take a holistic look at every applicant's financial situation. Rather than focusing solely on credit history, we use open banking to look at your income and expenditure, too.

If you've just moved to the UK and are seeking a low-interest personal loan, why not take a look at Abound?

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