8.8.2022

Do I Need A Credit Score In The UK? + 9 More Credit Score FAQs

New to the UK? Learn everything you need to know about credit scores in our credit score FAQs.
Do I Need A Credit Score In The UK? + 9 More Credit Score FAQs

If you’re new to the UK, you probably don’t have a credit score just yet. And while you don’t need a credit score immediately, they’re an essential part of UK life — so it’s worth thinking about your credit score sooner rather than later. They’re really important for making most big (and some small) purchases.

Your credit score helps companies understand if you’re a reliable person to lend money to. If you apply for a loan, credit card, mortgage, car financing, or even a mobile phone contract, the company you’re borrowing from will look at your credit score to see how good you are at paying off your debts.

But UK credit scores aren’t as simple as they seem — especially when you’re trying to build a credit score in a new country. Find out everything you need to know in these credit score FAQs.

Do I need a credit score?

You don’t need a credit score to make everyday purchases. But when you want to borrow money or set up a payment contract with a company, they’ll check your credit score. So you need a credit score if you want to:

  • Get a mortgage
  • Buy a car on finance
  • Take out a loan
  • Renting a flat from a private landlord
  • Apply for a credit card
  • Get a mobile phone contract.

These are the most common reasons you might need a credit score, but many other companies also perform credit checks. They should always let you know if a credit check is needed so you can agree to the search.

Why don’t I already have a credit score?

Your credit score is based on your credit history in the UK, which can include:

  • Details of previous loans you’ve taken out
  • Overdraft payments
  • Household and utility bill payments (including missed or late payments)
  • Any fraudulent payments made in your name (whether by you or as a result of identity theft).

Your credit score doesn’t update instantly every time one of these actions is taken. It takes time to build up a credit score. If you’ve moved to the UK recently, or you don’t have any bills, bank accounts, or loans in your name, you may not yet have a credit score.

I have a credit score in another country — can I transfer this to the UK?

Credit score information doesn’t always cross borders. Even if you had an excellent credit score in another country, you’ll have to start from scratch in the UK.

It’s a good idea to keep a copy of your overseas credit report. Some creditors or lenders may accept this as proof that you’re a reliable borrower, and can use it to inform their lending decision.

What is a good credit score?

There are 3 credit reference agencies (CRAs) in the UK that can give you a credit score: Experian, Equifax, and TransUnion. Each CRA has slightly different credit score ranges. To make credit scores easier to understand and compare, these agencies created VantageScore — a universal credit scoring system managed jointly by all 3 CRAs.

Whether your credit score is rated as Good or Excellent depends on the scoring system used. With Experian, a credit score of 700 is considered Poor. But with Equifax and VantageScore, 700 is a Good credit score. So you should be aware of differences between each CRA, and try to ensure your credit score is Good to Excellent across all platforms.

What can I do to improve my credit score?

There are a few simple ways to improve your credit score:

  • Pay your bills on time — set up a direct debit to make sure of this
  • Use a credit card to make small purchases — and pay your credit card bill on time
  • Protect your bank accounts from fraud and identity theft — use strong passwords and multi-factor authentication
  • Join schemes that prove you’re financially responsible — such as a rotating savings club
  • Register on the electoral roll (not all expats are eligible — check if you can register on the gov.uk website).

What can harm my credit score?

Missed or late payments can reduce your credit score, making it more difficult for you to borrow money in future. Borrowing more than you can afford to pay back and taking out loans with high interest rates can make it difficult to keep up with your payments.

Having significant debt can also harm your credit score. Make sure any debts are paid off before you put money in savings or investment accounts. Find out more about the safest places to keep your money.

If lots of companies perform hard credit searches on you in a short space of time, it suggests you’re trying to borrow a lot of money at once. This can alarm CRAs, and damage your credit score.

Fraud can also harm your credit score. If someone manages to access your bank account and use it to make fraudulent payments, this will stay on your credit report. So it’s important to make sure you have strong passwords and PIN numbers that are impossible to guess.

Who decides if my credit score is good enough?

While credit reference agencies track and assign you a credit score, they’re not usually the ones who decide whether or not you can borrow money. Instead, this is up to the money lenders themselves. They’ll use the information from your credit report — including your credit score — to determine the risk of giving you credit.

If they decide the risk is too high, they won’t allow you to borrow money. If your credit score is within their acceptable range, they’re more likely to offer you credit.

Who can see my credit score?

UK CRAs must obey UK data protection laws like GDPR — which means they have a duty to keep your credit score information private unless you allow it to be shared.

Banks, credit card companies, and other lenders will ask your permission to perform a credit check. This is sometimes hidden in the small print, so if you’re unsure, make sure you ask if a credit check will be performed. (This is important, because too many credit checks can damage your credit score).

What’s the difference between a hard and soft credit check?

A company can perform a hard or soft credit check. A hard credit check is an in-depth search of your credit history performed by banks and credit lenders. A soft credit check gives companies a high-level overview of your credit history. When you check your own credit score on a CRA website, this is a type of soft credit check.

It’s important to know the difference between hard and soft credit checks because too many hard credit checks can damage your credit score. Soft credit checks don’t show up on your credit file, so they don’t impact your credit score.

How can I find out my credit score?

You can find out your credit score by signing up for an account with any of the credit reference agencies mentioned above. Be aware you may need to pay for a credit report subscription.

Credit scores and wealth planning

Having a good credit score helps you get on the property ladder — which is one the best ways to build financial security for you and your family in the UK. Learn more about intergenerational wealth planning, and find out what you can do now to give your family a secure, successful future for generations to come.

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