How To Build A Credit Rating As A New Immigrant?

If you are considering moving to the UK for a career, job, or to settle after marriage, you will need a credit rating. However, building a credit score requires you to cover the basics first. You must have a relevant bank account, credit score, residential address, contact number, and bills in your name.

It reveals that you are a citizen of the country, and this is the first step to building a credit rating. It will help you get help with cash when you need it urgently. Alternatively, having a credit score to get a verified rental and an affordable one, too.

Rome wasnt built in a day, and neither is your credit score improved over time. However, the blog lists the strategies that might help you build a credit score as an immigrant.

What do you mean by credit score, and why does it matter?

You must have a credit score as a citizen of the UK. It is the basic measure of how your finances look. A credit score is a 3-digit number that credit agencies provide to an individual. They analyse basic aspects like employment history, residential history, financial management, joint accounts, and personal information to provide one.

Individuals with high credit scores (961-999), according to Experian, a credit agency, hold an excellent credit rating. Alternatively, individuals with credit scores ranging from 561 to 720 are deemed to have a bad credit score.

Having a good credit score is important as it helps you with the following aspects:

F Fetch a cheaper telephone line

F Get an affordable place to rent

F Grab a promising job offer with a handsome income

F Get a personal loan at affordable interest rates

F Get better rates on credit cards

F Buy a home cheaply with low-cost mortgage quotes

F A debt-free history ensures a stress-free life

7 Strategies to build a credit score as an immigrant

Aspects like credit history, payment history, credit utilisation rate, and credit type also decide your credit score. Credit utilisation is the rate that reveals the ratio between the available credit and the limit used. Having a low credit utilisation rate is important to keep your credit score healthy. It means your expenses must be less than the total income. Here are other strategies that may help an immigrant build a credit score from scratch:

1) Apply for a credit builder loan

Individuals with little or no credit history may benefit from a credit builder loan. It helps you create and grow your credit score from scratch. Immigrants or students may benefit from this. The loan works just like a savings account.

You pay fixed repayments on a loan, and the amount gets deposited. You may get direct loans for bad credit scores by contacting the right loan providers. The requirement for a credit builder loan is minimal. Therefore, paying regularly for a long time helps you build a positive credit history. You can decide the amount you want to pay every month on the loan.

2) Ensure a long-term residential history

Stability is one thing that lenders, employers, and landlords check regarding financial decisions. You must be searching for a place to start your new life. However, factor in the aspects that you need in your new home and the vicinity.

It is because once you choose a location to stay, you must live there for at least a year or two. Check the power backup, grocery marts, council tax, transportation facilities, etc. It should be within your budget.

3) Set up and pay bills in your name

Earlier, you may have depended on guardians for bill payments. However, once you reach the new city, you must take on the responsibilities. It may require you to have a part-time job to support basic life needs and wants. You can find that easily in the respective country. Therefore, you just need to have a bank account and use it to repay the bills.

Paying your monthly bills on time for at least a year or two may have a positive impact on your credit report. It reveals the potential to carry the loan and credit card payments too. Therefore, you may qualify for cheap loan and credit card rates.

4) Pay your rent timely

Your rent history, as mentioned above, is the prime aspect to build your credit score. Moreover, landlords consider your previous rental history or payment frequency to decide whether to rent it out. Therefore, you must save a lump sum, especially towards the rental payments. You can also set the direct debits to repay the dues in a timely manner.

Moreover, identify whether you can reduce the rental costs if you struggle to repay. Some landlords may allow you to pay the minimum, if not the whole amount. It is when you have been regular with the payments. It could be challenging if you are new to the city. Thus, you must save a lump sum for at least 6 months to repay the rent regularly. It prevents you from eviction and helps build your credit score.

5) Take out a mobile contract

It is the most difficult part to get a mobile contract as an immigrant. It is an important cost that you incur every month. Moreover, you need to use your smartphone often, and thus you cannot skip a mobile phone contract.

To get one, you must choose a plan and a mobile contract provider. Then provide an ID proof, the residential proof, and a bank account to set the direct debits for the bill payments. Make sure to conduct regular payments by ensuring a minimum amount of money in the specific direct debit bank account. It should be higher than the usual mobile bill.

6) Get on the electoral roll (if possible)

An electoral roll gives the legal right to a citizen to cast a vote and is an important parameter of ones identity. As an immigrant, you may not be eligible to vote in the UK. If moving to the country forever, then having one is a must.

Alternatively, you can provide a notice of correction to your credit report by contacting the prime credit agencies. It reveals why something is not visible on your credit report. It thus eliminates the confusion associated with the electoral roll, too. It explains why you cannot be on the credit score.

7) Receive income into the new bank account

It is generally important to receive the earnings in your new UK bank account. It is the bank account that you use for paying the bills. It concludes your financial undertakings in one spot and eliminates any confusion associated with them. Having received the income directly in the bank account instead of cash is better. It grants lenders, landlords, and employment providers a clear view of your finances.

Bottom line

These are some of the best strategies to build your credit score as an immigrant. Yes, it could be challenging to start everything again from scratch. However, you have to do it to be eligible for the loans and other financial options, and employment in the new country. Also, request a copy of your previous country or native lands credit report. It may help you unless you get the new one.