You might share some aspirations if you landed in your dream country recently. However, amid settling up things, one generally goes out of cash. In a new country, you could neither have friends nor contact a lender for immediate help. Getting a loan as an immigrant is challenging. It is because as you land, you lack a valid UK identity and a credit score.
Thus, from getting your name on the electoral roll to opening a bank account and building credit, there is a lot you must do once you land. So, if you are here to know everything to build a credit score as a new UK immigrant, the blog is just for you.
Let’s begin with the first thing.
What is a credit score, and why is it imperative to have?
A credit score is a parameter that reflects a person’s financial management capabilities. It is a ratio of your income and expenses/liabilities.
It reveals how reliable you are regarding loan affordability and timely repayment. Individuals with checkered/ red-marked credit history find it easier to qualify for loans than one with a managed credit profile. Credit Reference agencies assign this to a person. It determines so by analyzing your past debts, current income, and liabilities.
If you are considering a no refusal loan in the new country, you must first build a credit. Debt consolidation help release some money clocked in high-interest loan payments, helping you eliminate additional stress with a single payment. And one without a third person is something you may own only after having a valid UK credit report and score.
And sadly, you cannot transfer the past credit history, the one you had in the previous nation, to the UK. It implies even if you had a perfect score there. New provisions do not consider it. One silver lining here is you can submit a copy of the previous credit score to the lenders; it may help you with the application.
As an immigrant, you may need a loan for big-ticket purchases- furniture, car, interior designing, etc. And for this, you must own a good credit score.
Credit Parameters that decide the Borrower’s affordability potential
Credit reports are a detailed overview of your financial health. A lender, while evaluating the affordability, analyzes the below parameters in the UK:
- Your name, address, and date of birth
- Previous successful and unsuccessful credit/loan applications
- Credit repayment history (missed or late payments)
- How much debt do you owe currently (minus student loan debt)
- Your credit cards and joint accounts (if any)
- Your existing account income/turnover
- Whether you have bankruptcy/ IVA arrangements on your profile
Note: Apart from lenders, landlords, and employers evaluate these parameters before renting or hiring you.
How much time will it acquire to construct a credit history as a new UK immigrant?
It takes up to 3-6 months to build a credit score as a new UK immigrant. Before that, you cannot witness any potential change in your credit history. Many immigrants can develop a good one within a year. It entirely depends on credit management, responsible payments, and limited use of credit cards. Before building a sound credit profile, only apply for new credit cards.
Can you do anything if you still have a few weeks to land in the UK?
Unfortunately, there is little you can do before landing in the UK. You must check the banks to open up your account. If you are filing for it internationally, it may cost you a bit. However, it would be better if you do it in advance.
The lenders or financial institutions do lend to immigrants but with a cap. The minimum balance must be £25000. It would help you manage loan fees and the total cost.
Thus, one of your priorities should be valid address proof before landing here. To obtain a Permanent Residency in the country, you must spend a specific stay. The purpose depends on the visa. The applicant must submit proof of living in the country for the set duration.
Generally, you must stay for 5 years straight in the UK to file for permanent residency. Here are other valid visa reasons to stay in the country. You must complete this duration of stay to apply for permanent residence.
| Visa Type/ Reason for stay | Duration for stay |
| Wedding or single partner to a UK citizen | 2 years |
| Lawful stay for long (any reason) | 10 years |
| Unlawful stay | 14 years |
| Tier 1 and Tier work permit | 5 years |
| Ancestry | 5 years |
Permanent residency in the UK is identified as Indefinite Leave to Remain (ILR). With this ILR status, you share the right to live, work and stay in the country free from immigration or stay duration limitations. You can apply for this if residing for over 10 years in the country (without gaps). Let’s know the other eligibility parameters to secure ILR.
How to file for permanent nationality in the country?
Credit Agencies use your residential address to determine your credit behavior before funding. How much you move, or shift places could impact your chances of getting a loan. Lenders look for stability in residential status. Frequent shifting could imply serious credit issues. If you want to build a credit score as a new UK immigrant, avoid moving over 4 times a year.
To apply for a permanent residency or ILR, you must fulfill the following requirements:
ELIGIBILITY CRITERIA FOR PERMANENT RESIDENCY
- Should belong to age 18-65 years
- Must qualify for the Life in the UK test. It is about British traditions and customs. You have to score at least 75% to pass.
- Prove sufficient English language skills by revealing qualifications at B1, B2, C1, and C2 levels
- You leave the country for 180 days continuously, or 540 days in total. Do not count legalized crime, like staying in prison or a secure hospital.
- You have a work visa to ILR.
- Should Move from partner visa to ILR- £18,600/ Year with no dependent children, £22,400 with one dependent child, and £2,400 additional for any extra child.
What Other Ways Start Your Credit Score as An Immigrant?
Apart from the above part, you must work on the below aspects to build and ensure a good credit history as an immigrant.
1) Apply for an SSN (Social Security Number)
SSN or Social Security Number is a 9-digit number that government assigns to its citizens. It helps identify the benefits individuals leverage and other details. It is essential to issue new credit cards in your name; lenders check this as valid proof of your identity.
2) Get a traditional bank account
You must attend and qualify for the interview to have your bank account with a reputed institution. You must provide the below documents before applying:
- Your passport (Mandatory)
- Biometric Residence Permit (despite residing on a visa)
- Letter of employment
- Residential proof
- Letter from the bank advocating you as a customer
You must research and choose the best bank. Shifting banks frequently affect credit scores. Switch before you apply for a big loan or a credit card.
3) A valid employment proof
Getting a job must be a to-do on your list. Before landing in the UK, you must have employment proof in the form of a letter or an offer letter. It would help secure credit comfortably. Lenders consider a person with stable employment to be a responsible and authentic borrower. Your salary is proof that you can pay for the debt taken promptly.
4) Get on an electoral roll
If you plan to shift permanently to the UK, getting your name on the electoral is identically important. Apart from safeguarding your identity, it helps your credit score. Here is how:
- Registering on the voter’s list can help you save time on loan verification.
- Having your name on the electoral roll grants easy access to insurance, passport, and other legal services.
Once you register to vote, your details must be visible on the credit report within 30 days. However, you may encounter a delay in this case if:
- You registered to vote during the annual canvass
- You do not have a permanent UK residential address
5) Use the account responsibly
It would help to use finance wisely to build a credit score as a new UK immigrant. Identify the requirement and tap loans accordingly. For example,
Clear it if you took payday loans with no fees and bad credit as an independent borrower. Evaluate procedures to eliminate issues like CCJ (County Court Justice) from the profile. Even if you pay it, CCJ stays on a credit report for 6 years, but the credit status reveals- PAID. After 6 years, the CCJ gets removed, and you may encounter an increased credit score.
Check for similar issues post using credit for almost 7 months. Optimize your credit report by paying any-credit card debts, high-interest mortgages, missed payments, etc. You can also consider a credit builder loan to have a positive start on your credit profile. It is ideal for no-credit history or very-bad credit history individuals.
Bottom line
To build a credit score as a new UK immigrant, you need patience, perseverance, and continuous dedication toward legalizing permanent residency. The blog is a clear route to ensure a seamless credit score and gain a valid identity.
