Credit Cards for New UK Residents: Your Passport to a Solid Credit Score

If you've just arrived as an immigrant or expat in the UK, it’s really important that you get to grips with the idea of building a credit score in your new country. The likelihood of you being accepted for a credit card and many other financial products is measured through your borrowing and repayment history, which lenders use when assessing whether it’s risky to loan you money.

Without a good credit history, obtaining credit products like credit cards, loans and mortgages can be difficult. Financial institutions won’t be able to assess whether you're a safe bet or not, and may be less inclined to offer you credit.

However, building a good credit score is certainly possible for new immigrants and expats in the UK and there are numerous benefits that will come with it. By demonstrating responsible management of your finances, you can gain financial credibility and access more credit products and services. This could translate into lower interest rates or repayment terms, ultimately improving your long-term financial security.

Building a credit score is an essential first step for anyone new to the UK financial system. It can provide access to credit products and lay the groundwork for a prosperous financial future.

This guide will provide expats and immigrants in the UK with essential information for building a credit score, accessing credit products, and other financial products.

What Is a Credit Score and What Factors Impact It?

Credit scores in the UK are determined by credit reference agencies like Equifax, Experian and TransUnion. These agencies use various factors to assess a person's creditworthiness and assign them a score. Here are some of the main elements that may influence a person's score:

• Payment history: One of the most influential elements that determines credit scores is a person's payment history. Lenders look for evidence that borrowers make their payments on time and in full, as late or missed payments can have a detrimental effect on one's score.
• Credit utilisation: Credit utilisation refers to the amount of available credit a person uses compared to what they can obtain. High levels of credit utilisation can be seen as an indication of financial strain and may negatively affect credit scores.
• Length of credit history: The length of someone's credit history can have an impact on their score. Lenders prefer to see that borrowers have a long record of responsible use of credit.
• Types of credit used: The type(s) of credit a person has used in the past can influence their credit score. A mix of different debt instruments, such as credit cards, loans and mortgages, may be seen as an indicator for financial strength.
• Credit applications: Applying for credit can have a significant effect on your credit score. Multiple applications in a short amount of time could be interpreted as financial instability and negatively impact your score.

You should  be aware that credit reference agencies in the UK may use different factors and weigh them differently when calculating credit scores. Since credit scores can change over time as people's financial situation shifts, it’s essential to regularly monitor your score and take steps to improve it if needed.

How to Build a Credit Score as a New Immigrant in the UK

• Register to vote: Registering to vote at your current address can help boost your credit score as it verifies your identity and address. This ensures the credit reference agencies can match up information on your report with information at your current residence.
• Open a bank account: Opening and managing your bank account responsibly can help you build an impressive financial history, which is crucial when building your credit score. Regularly depositing and withdrawing money, paying bills on time, and avoiding overdrafts all demonstrate responsible financial management and help boost your score.
• Apply for a credit card: Opening a credit card can help boost your credit score, but it's essential that you use it responsibly. Making small purchases and paying them off in full and on time each month shows good credit management and will gradually raise your overall rating over time.
• Maintain a low credit utilisation ratio: Maintaining a low credit utilisation (ideally below 30%) can help improve your credit score. This involves only using a portion of the available limit on each card you own.
• Pay bills on time: Paying your bills on time - including credit card bills, utility bills and rent - is one of the most essential elements in building a healthy credit score. Late payments can have an adverse effect on your score so ensure to pay on time every single time.
• Check your credit report regularly: Checking your credit report periodically can help identify any errors or inaccuracies that could be negatively affecting your score. You can do this for free with the three major credit reference agencies in the UK - Equifax, Experian and TransUnion.

Building a good credit score takes time and dedication, but the benefits can be immense in the long run - you'll gain access to more credit options with lower interest rates.

Best Credit Cards for New Immigrants and Expats in the UK

Yonder is the ideal solution for expats seeking an economical and convenient way to manage their finances while living and working in the UK. Here are some reasons why you should choose a Yonder credit card:

• Designed with expats in mind: The Yonder credit card is tailored to meet the unique needs of those who have recently settled in the UK, providing travel and rewards features tailored specifically for their time in the UK.
• No foreign transaction fees: When making purchases outside of the UK with us, there are no fees to pay. That means you can save money on purchases made abroad.
• Competitive exchange rates: Our credit card doesn’t mark up our foreign exchange rates, so you can save money when using your card or withdrawing cash overseas.
• Handy mobile app: Yonder cardholders can manage their accounts, keep track of points earned, and keep up to date with the latest Yonder benefits, all on our shiny mobile app.

At Yonder, security is incredibly important to us, which is why our credit card is equipped with robust security features to prevent fraud and unauthorised use.

Credit Card Requirements for New Immigrants and Expats in the UK

If you are a newly immigrated or expat living in the UK, there are certain criteria you must meet to apply for a credit card. Your individual circumstances may dictate which requirements apply to you; however, generally speaking you will need to provide:

• Proof of address: In order to apply for a credit card in the UK, you will need to show evidence of your address. This could be in the form of an utility bill, bank statement, or tenancy agreement in your name with proof of current residence.
• Proof of income: You’ll need to securely connect your bank account using Open Banking so you can prove your source of income. If you can’t connect your bank account, to prove your income, you’ll need payslips, employment contracts or bank statements that show regular deposits. Credit card issuers require proof that you have a reliable source of funds to repay any debt on your card.
• Credit history: As a new immigrant or expat to the UK, you may not have an established credit history here yet. Yonder is great for new expats to the UK, as we don’t require a credit score in the UK for you to apply. Provided you have an income and address, you can securely connect your bank account instead of relying on an established credit history.
• Identity verification: Credit card issuers will also require you to prove your identity. This could involve providing a passport, visa or other government-issued identification.

Apply for a Yonder Credit Card Today 

As a new immigrant or expat in the UK, building a good credit score can seem like an intimidating, or even impossible challenge. But once you start to form your credit history, you can look at applying for Yonder where you'll have control of your finances with an easier path towards building a strong score over time - our credit card is designed for travellers with features such as no foreign transaction fees, competitive exchange rates, and mobile banking, that let you manage finances across different countries while building a stronger credit profile that opens doors to better lending options and lower interest rates.