Moving to the UK: your credit rating

Moving to a new country can be an exciting and life-changing experience - but there are several things you'll need to get right before everything can 'fall into place'.

Let's assume you're moving to the UK to buy a house and 'settle down'. In order to buy a house, it's very likely you'll need to take out a mortgage. However, to take out a mortgage, you'll need a good credit history…

You will probably have a credit history already - but this will be relevant to the country you (used to) live in. When you move to the UK, you'll have to build up your credit history for this country.

For this article, we're going to look at what a credit rating is in general, how it might affect your chances of getting a mortgage and what you could do in the UK to improve your credit rating.

What is my credit rating?

Your credit score is the result of the 'credit check' potential lenders carry out before making a decision on an application for a financial product (a bank account, a credit card or a mortgage, for example). They base this score on your previous experience with credit, as recorded in your credit history. This gives them an idea of how much risk they would be taking if they lent you money - which helps them make their mind up as to whether or not to offer you credit.

To get a copy of your credit report in the UK, you'll need to contact a credit reference agency (Call Credit, Equifax or Experian).

How could my credit rating affect my chances of getting a mortgage?

In simple terms, the better your credit rating is, the more chance you've got of securing the best deal.

So, if your credit rating is 'excellent', for example, your lender will see that they won't be taking as much of a risk offering you credit as they might if they offered it to someone with a 'poor' credit rating.

And because a mortgage is a big financial commitment, your credit rating is very important when it comes to your mortgage lender making their decision.

How could I improve/build my credit score?

If you already have a credit history in the UK, but it's poor - or you don't have a credit history in the UK and would like to build one - what could you do?

Well, there are three simple steps that can help you form the 'foundation' of a good credit score.

1. Register on the Electoral Roll

In the UK, the Electoral Roll holds information (names and addresses) about almost every UK citizen over the age of 18. If you aren't listed, your lender may think twice about offering you credit.

So, register on the Electoral Roll, and it'll be much easier for lenders to confirm your identity and process your application.

2. Open a bank account

Lenders prefer to deal with people who can show they are able to look after their money. So, if you open an account when you come to the UK, you will gradually be able to build up experience with money that could improve your credit score over time.

3. Apply for credit wisely

If you keep on (unsuccessfully) applying for credit, you could actually be making it harder to be approved. This is because every application you make for credit will be recorded on your credit report - and too many applications in a short space of time might make lenders suspicious (and therefore less likely to offer you credit).

So, if you've been refused credit a few times recently, wait six months or so until you try again. You can use the time you spend waiting taking action in other areas of your finances to improve your credit score.