Will I be accepted?
Whether you’re a UK resident or you’ve just arrived, when you apply for a loan the lender will look at your credit history so they can determine how much of a risk they are taking if they accept you as a customer. When they look at your credit history, they are looking at whether you’ve borrowed money in the past and how successful you’ve been at repaying this.
The longer your credit history, the more information the lender has to help them determine whether you’re a responsible borrower. However, if you have just arrived in the UK it is unlikely you’ll have had much chance to build up this bank of information. This means you may struggle to find a lender willing to approve a loan and offer a reasonable rate of interest.
“You could even ask your new employer if it’ll be possible for you to work a few extra hours during the first few months of your contract to help cover the additional costs of moving...”
What can I do if I can’t get a loan?
Budgeting is a major part of relocating aboard. It can take months of planning and it’s wise to make sure you have enough money saved to cover the cost of your new home and all your expenses for however long you have to wait until your first pay day. If you have a job lined up for you, careful planning may mean you avoid the need to borrow altogether. You could even ask your new employer if it’ll be possible for you to work a few extra hours during the first few months of your contract to help cover the additional costs of moving.
Another option is to take on some part-time work to boost your finances further. For example, you can be paid to take surveys online, which means you don’t have to worry about travel costs as you can work from home. Lots of companies want to know what people think about products and services and will pay for your opinion. This option won’t bring in a lot of money, but it could ease the strain a little. Just remember that you may have to declare your earnings to HMRC for tax purposes.
If settling you and your family in is taking up too much time for you to work during the first few weeks, you could consider selling any items you have that you suspect might be valuable but aren’t sentimental about. Ebay can be a good option for this, but you’ll have to pay a seller’s fee. Alternatively, you could check out Gumtree as a way of selling items to people who live locally.
You may also find you’re entitled to benefits that the government provides to EEA residents who fulfil certain requirements. To see whether you could be eligible for this help, click here.
Contact your old bank
Unfortunately, you can’t transfer your credit history from one country to another, but if you still want to look into getting credit then contact your old bank to see whether they have any branches in this country. They might be more willing to lend to you if they have an existing record of your finances.
“Once you have your bank account, it’s a good idea to set up a couple of direct debits for your utility bills or mobile phone contract...”
Build up a good credit history
If you’ve budgeted for your move and know you can afford to wait before you make an application to borrow, it’s a good idea to focus on building up a credit history. Building up a credit history that will make banks want to lend to you does take time and there are no fast track ways of doing this. That’s why it’s best to make a start as soon as possible.
Here are our top tips for building up your credit:
- You’ll need to be able to provide both your ID and your address before you can get any type of financial product in the UK. You’ll need a fixed address in the UK, plus evidence that you live there such as council tax bills in your name at that address.
- The most important place to start is to get a bank account in this country. This is probably something that you’ll do anyway so that your salary can be paid into it, but it also shows that you’re planning to stay in the country for some time.
- If you’re eligible to vote in the UK, make sure that you are on the Electoral Roll as this is one of things that lenders will use to search for you when you apply for a loan. If you’re unsure whether you’re eligible to vote in British parliamentary elections, click here for further information.
- Once you have your bank account, it’s a good idea to set up a couple of direct debits for your utility bills or mobile phone contract. A direct debit will come out automatically so you won’t forget to pay it, and this will show your regular payments are being made on time – which should help your credit score
- Once you’ve been settled in the UK for a while, it may be worth getting a credit card to help build up your credit history. There are some credit card companies specifically designed to help people with little or no credit history. Once you have a credit card, make sure you stick to your credit limit and always pay at least the minimum payment every month, not doing so could harm your credit rating. Remember, this card should be used to help you build up your score and not relied upon for your day-to-day living costs.
- Be careful what credit you apply for, as each application – whether it’s accepted or not – will show up on your credit history. If know you have little chance of being accepted for a particular line of credit, it may be best to hold off applying for it for a while.