Credit Building > How to build credit if you’re new to the UK

How to build credit if you’re new to the UK

Wollit Team3 minute read · Updated 1st July 2024

Moving to a new country can be both exciting and overwhelming. As a new immigrant in the UK, you may find that building a credit score is one of the most important things you need to do as you settle into your new life.

A good credit score can open doors to better financial products, lower interest rates, and even improved job prospects.

However, starting from scratch can be challenging. In this article, we will guide you through the process of building a credit score in the UK as a new arrival.

I just moved to the UK. Why should I bother with a credit score?

If you’ve recently moved to the UK, here are some reasons why you should bother with a credit score:

• A good credit score can help you get accepted for more loans, credit cards, car finance, and mortgages.
• You might also get better rates, lower fees, higher loan amounts and credit card limits.
• Landlords and letting agencies often consider credit scores when selecting tenants. A good credit score can make it easier to rent the property you want and maybe even negotiate a lower deposit or rent.
• A good credit score can also make it easier to set up utility accounts without large deposits or other requirements.
• Mobile phone companies also check your credit file before offering a contract. You’ll need a good credit score if you don’t want to be stuck on SIM-only plans.
• You might also be offered lower insurance premiums.
• Finally, even some employers may check credit scores as part of the hiring process, especially for positions that involve financial responsibilities.

In short, a good credit score goes beyond financial benefits. It can impact many other things you’ll deal with while living in the UK.

How do credit scores work in the UK?

A credit score is a three-digit number that shows how creditworthy you are. The higher your score, the better your credit.

The UK has three leading credit reference agencies: Experian, Equifax, and TransUnion. These agencies collect information about your financial history, including loan payments, credit card usage, and public records. They then put together a credit file for you, which they will use to calculate your credit score.

You can check your credit score for free through various online services:

• You can sign up to Experian for your Experian credit score for free.
• For your Equifax credit score, sign up to ClearScore and check it for free.
• For your TransUnion score, do the same, but on Credit Karma.

ClearScore and Credit Karma give you access to more than your credit score – they also show you your Equifax and TransUnion full credit report, so you’ll know what influences your credit score and how. For Experian, you’ll need to pay $14.99 a month, but the free account also gives you a good amount of information.

Will my credit history from my home country affect my credit score in the UK?

No. Your credit history from your home country does not transfer to the UK. In fact, your credit history also doesn’t affect your UK credit score at all.

You will need to build a new UK credit history from scratch.

What are the steps to build a credit score in the UK?

To build a credit score as a new immigrant in the UK, there are several key steps you need to take:

1. Get out of the Airbnb and find a more permanent home in the UK. Avoid moving often, and make sure you have a permanent address to show proof of identity. You can use Zoopla and Rightmove to quickly find a place to rent.
2. Open a bank account. This is crucial for building credit. If you’re employed, ensure your wages go into the account and pay bills through direct debit. The easiest UK banks to get accepted to as a newcomer to the UK are Monzo (an entirely digital bank) and Barclays (which offers a “New to the UK” current account).
3. Register to vote. Until you’re a British citizen, you do not have the right to vote in the general election. However, you can register to vote in the local elections. This also improves your credit rating by confirming your identity and address. You can register to vote online on the UK Government website.
4. Get some utility bills in your name. Some of the largest utility providers in the UK are Octopus Energy and British Gas.
5. Take a mobile phone contract. You should take a mobile phone contract even if you can afford to pay for the latest iPhone in cash. This will be your first credit agreement (technically a loan for the phone’s value). As you make monthly payments, it will show up on your credit report and help you build your credit history. The most newcomer-friendly mobile networks in the UK seem to be EE and Vodafone.
6. Report your rent to the credit reference agencies. This is a relatively new thing to the UK, and keep in mind that, for now, rent payments don’t actually count towards your credit scores. Some tools you can use are Loqbox, Canopy, CreditLadder, and Wollit.
7. Consider applying for a credit builder card. As long as you make small purchases often and pay them off in full and on time each month, you’ll avoid high-interest charges and slowly improve your credit score.
8. Finally, download a credit-building app.

One such app is Wollit. Building your credit history with a credit builder card requires you to buy things on debt first and then repay them in full and on time each month.

With Wollit, you only need to pay a fixed monthly subscription. Wollit then reports this subscription as a loan repayment to the credit reference agencies.

This directly builds your credit history and improves your credit score while keeping you safe from unexpected fees, high interest rates, and the risk of getting into a debt spiral.

Eventually, as your credit score increases, you’ll become eligible for the full range of excellent financial products available in the UK.

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