Understanding Credit Scores & Credit Repair in the UK

Your credit score is a number that represents your creditworthiness. It shows banks and lenders your ability to make bill and loan payments on time. The higher the number, the more reliable you are as a borrower. Having a good credit score is essential if you plan to borrow for major purchases – mortgages, flat rentals, and cars included. The three main UK credit score companies — Experian, TransUnion, and Equifax — analyse your financial history, the amount and frequency of borrowing, ability to pay back, and credit card history. They then assign a number to you between the following ranges:

  • 0-999 for Experian
  • 0-710 for TransUnion
  • 0-700 for Equifax

Being turned down for a loan can stop your life plans in their tracks.. But  don’t despair. There are things you can do to get your financial life back on track if a few mistakes in your past are causing you problems now.  It’s important to remember that repairing credit is a long process so the sooner you start, the better.

How to Build a Credit Score in the UK

  • Assess your finances: If you can, download a copy of your credit report. Identify any negative markers on your file to understand what might drag your credit score down and make sure there are no errors on it.  
  • Fix any errors on your credit report: You may find a marker on your credit report (e.g. loan, CCJ, IVA etc.) on your credit report that had nothing to do with you. Mistakes happen and markers sometimes show up on credit reports in error. Make sure you correct any errors on your credit report so it accurately reflects your financial situation and your score doesn’t unnecessarily suffer.
  • Make a plan to budget  & pay off credit card debts: stop using your credit cards as much as possible and focus on paying off the debt. There are multiple debt repayment options you can use.  
  • Pay bills on time: having a steady, reliable payment history is one of the most important factors in deciding your credit score. If you can’t manage your bills  all coming out at the beginning of the month, call the companies you owe money to and ask if they can change due dates to spread payments out and make them more manageable.
  • Get on the electoral register: registering to vote tells lenders you are who you say you are and increases reliability.

Infographic: Better credit saves money: calculations on a poor to fair credit score savings on interest rates for loans, mortgages etc. 

People also read: Beginner’s Guide to Building Credit the Right Way.

How to Build Credit as a New Resident in the UK

If you’re moving to the UK from another country, you may have to start building credit from scratch. But keep in mind that while your credit score does not carry over, your debts often will. Here are the first steps you should take to build credit in the UK:

  • Open a UK bank account: credit scores don’t carry over from overseas, so opening a UK bank account is a critical first step. To open a bank account with one of the larger UK financial institutions you will need to arrange an in-person appointment. 
  • Get a UK credit card: the easiest way to start building credit in the UK is to get a credit card – as long as you use it responsibly and pay your bills on time. As a new UK resident you do not have a credit history, so the bank will likely require you to show proof of employment and residence before approving your request for a credit card.
  • Get a mobile phone contract: In the UK, mobile phone payments count toward your credit score. Keep in mind you may have to show proof of employment if you have no existing credit history in the UK.
  • Make sure you have proof of a UK home address: proof of residence is a prerequisite for many forms of credit, including credit cards and loans. Typically lenders will accept rental agreements or letters of employment as proof of a UK home address.
  • Develop a financial checklist: having a financial checklist helps you actively budget towards your goals, tackle any potential financial roadblocks, and helps you take control of your money in tough situations.

Portify App: Build Your Credit Score

Portify isn’t just a personal finance app — it’s designed to help you take control of your future, equipping you with the right knowledge and tools to overcome financial obstacles. Whether your goal is credit repair, to get yourself out of debt, or to build your credit to purchase your first home, Portify’s credit builder is here to help. Portify also offers flexible no-interest financing to make sure you can cover any unexpected expenses and prevent any negative marks on your credit report.

*Portify Limited is a credit broker.

lauren

Lauren Robson is the digital communications manager at Portify.
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