I moved to the UK from a country that has no concept of credit scores or any of that nonsense. Here’s how to avoid the mistakes I made when moving here and not lose all your financial credibility!

I AM NOT A FINANCIAL EXPERT AND THIS POST IS JUST ABOUT MY EXPERIENCE AND NOT FINANCIAL ADVICE, FOLLOW ANY SUGGESTIONS AT YOUR OWN DISCRETION!

Why should I do this?

Everything related to “life admin” in the UK is based around having financial credibility. That means: banks, insurance companies, organisations, companies, landlords, etc. need to be able to identify who you are, where you live, and take money from you in a way that they approve of. This is very different from the European model, where everything is done in a sane way and you have any control over your own finances and how you pay for things.

Having good financial records and a good credit score will allow you to (for example; definitely not an exhaustive list!)

• Get accepted for credit cards, loans, mortgages, etc.
• Get cheaper fees, lower interest rates, and higher limits on the above
• Get better rental options, cheaper rent, or even be allowed to rent from certain landlords
• Get cheaper car insurance (or even be insured at all! Insurance companies will often refuse to insure non-UK drivers and essentially ban you from driving a car if you don’t have a credit record)
• Cheaper phone contracts, utilities, and remove the requirement for deposits
• Be allowed to sign up to UK societies and services that require payments via direct debit
• Appear to be a good and trustworthy citizen

Essentially, you will save a ton of money, time, and headaches in the UK if you do the things in this guide.

The key thing to realise is that the UK is fundamentally different from Europe and other countries in one sense: debt is considered good. Elsewhere, you will be encouraged to get rid of all your debt to appear financially stable. In the UK, having (certain types of) debt and paying it off on the lender’s precise terms makes you appear financially responsible and boost your credit score and creditworthiness.

“But I haven’t had any issues so far using my accounts / whatever I currently have…”

You will. I don’t care if you’re in the UK for a year or for the rest of your life. Doing the things in this guide will take a relatively short amount of time, but if you don’t do them, you will eventually run into a situation where you will need to do something and it will be a massive headache and a pain because you are not financially credible in the UK. TL;DR: IT’S EASY AND PART OF BEING A PROPER ADULT, JUST DO IT!!!

I was once very politely called an idiot by a bank worker once when I messed up with the below. Don’t repeat my mistakes!

Part 1: Getting a high street bank account

In my opinion, this is one of the most annoying things about the UK financial structure. It is a little bit archaic and still relies on you having an account in an actual, physical, “high-street” bank; i.e. one with an office in your city. You will often be required to show a high street bank card or provide original bank statements stamped by your local bank branch, both of which are only possible with a proper bank account.

There are lots of “online-only” banks like Monzo, Wise, Revolut, etc. which let you set up accounts quickly and easily, have great money-management tools, and good interest rates and other offers. The high street banks will offer you jack shit because they know that, in order to be credible in the UK, you need to have an account with them and use it as your primary way of managing your money. Don’t worry, though: you can pick a good bank and it will work almost as well as the online banks.

Look through the banks in your city and pick one that’s suitable. I would personally recommend opening accounts in both HSBC and Lloyds. HSBC is great for everyday money management and also allows you to transfer and convert Euros for free using their Global Money account service that they open for you automatically if you are a foreign student. Lloyds has a more modern app and it’s easier to open new accounts with them. Also, you should have a Lloyds bank account if you ever plan on doing anything with student societies: all of them have Lloyds business accounts (cheapest), and having a personal account will make your life much easier. But consider other banks, like NatWest, Barclays, Nationwide, etc. and see what works for you.

As a student, you will need to bring them your passport, visa (if applicable), and a proof of registration letter from your university (or college if you’re in Oxbridge; you can ask your college office for one). Go visit them during their opening hours, stand in line, and get it over with.

Make sure to open any accounts you will need as soon as possible. One factor used to calculate your credit score is “how old your credit accounts are”. Believe it or not, current (debit) accounts are also considered credit agreements in the UK, for reasons that will become apparent in the next sections! So, when you go to the banks, open any current accounts you think you will need immediately. Also, get a savings account in the high street bank. It will probably have a bad interest rate, but storing your money in one will indicate to the UK banks that you have some money saved up, which is a positive signal.

An important note on your address. This is something I didn’t realise as it isn’t a thing in Europe: your address is the primary way of identifying you as a person in the UK. This means that you must have the same exact address everywhere, down to the letter. If you address is even a single letter different on different accounts, it will look suspicious to banks and lenders and you may not be approved for financial services! (For example, “123 High Street, OX11AA”, “123, High Street, OX11AA” and “Room 1, 123 High Street, OX11AA” are all very different addresses in the eyes of financial bodies). This must also be the actual address where you live and pay bills, not just a postal address. For example, some students try to give their college’s address instead of their home address to the banks, and then get in trouble later on when they are unable to prove their identity by sending a utility bill or other document, as they don’t actually live at that address.

It’s a good idea to keep a detail of all your information (name, DOB, address, income details, email, phone number, and whatever else the banks ask you to provide) in a notes app ready to copy and paste, so that all the information is definitely the same across all providers.

Part 1.5: Getting a high street phone plan

You must have a UK phone number if you are planning on living in the UK for any period of time.

After you set up a UK high street bank account, you will unlock the ability to get a high street phone subscription. There are four network providers in the UK: EE, O2, Three, and Vodafone. Any other phone companies “piggyback” off one of these four networks and are not worth even considering. In Oxford, Vodafone is probably the best, though make an informed decision on your own.

The process for setting up a high street phone plan is pretty much the same as for your bank account, but require you to show your physical high street bank card at the mobile provider’s office. Do not use one of those “online-only” mobile network providers; they will likely be slightly cheaper, but they are not visible in the UK financial system. High street network providers are (very strangely) visible as credit agreements, and will bump up your credit score and give you financial credibility. You can also get a good deal from them if you sign up for a multi-year plan.

Part 2: Using your new bank account and services

Here’s some tips:

1. NEVER EVER EVER EVER USE THE (ARRANGED OR UNARRANGED) OVERDRAFT FEATURE ON YOUR BANK ACCOUNT! I made this mistake when I first moved here. My way of budgeting was giving myself a few hundred pounds per month on my primary bank account, and adding more from my savings account when I would run out of money and my account would go a few pence into the negative. Turns out, this absolutely TANKED my credit score and credibility: when I tried applying for another account, the bank said that I wasn’t eligible because I had “borrowed money without authorisation” 12 times in the past few months! The unarranged overdraft is the bank’s way of testing whether you can manage your money. If you never go negative and leave at least £20 on your account at all times, you are good. If you go negative even once (thereby using the debit account’s “credit” feature without authorisation), you are considered poor and unable to manage your money properly, and it takes about 3-6 months to recover from the impact on your score. What a culture shock, learnt that lesson the hard way! (Sidenote: when I asked the bank clerk whether I could turn off the unarranged overdraft feature to prevent this from happening, she said: “Absolutely not! That would be considered manipulation of your credit score!” It’s truly just a constant test from the bank.)

2. Actually use your high street bank account and debit card for daily payments. You will not get the benefits of the account if you don’t use it. If you have multiple accounts, make sure to have at least one transaction in each one per month, so that you get a proper bank statement for the month.

3. Get a chequebook from your bank for free. One day you’ll need to write a cheque; yes, these are still very much a thing here.

4. Pay with direct debit whenever possible. If your landlord or insurance or a company allows you to set one up, do it! Direct debit transactions that don’t bounce from your account will ensure that you pay your bills on time as long as you have enough money to cover them.

5. Regardless of whether you are paying by direct debit or not, pay all your bills on time. Missing a single payment, whether that’s rent or your mobile network plan will show up as a “missed payment” on your credit history and affect your score for six (6) years from the date of the missed payment. However, paying all your bills on time will be a massive boost to your credit score.

6. Try to pay money into your savings account every month. Having a steady flow of money into your savings account from your current account (so that it shows up on your statements) will show that you have good money management.

7. Never withdraw cash from an ATM on your high street bank account. This feels very silly: cash is king, after all! (and sometimes impossible to avoid) However, banks feel that clients who withdraw cash are “high risk” as they cannot track your transactions, and any cash withdrawals will stay on your record for a few months. If you absolutely need cash, withdraw it from an online-only account like Revolut for which you can order a physical card for free (plus shipping).

8. On the topic of international money transfers: High street banks like to see if you get income from abroad, so consider using services like HSBC’s Global Money account to convert your Euros/Dollars/etc. with no transaction or transfer fees in the UK. However, this will come with a slightly worse exchange rate than e.g. Wise, which offers the UK’s best exchange rates (and a good savings interest rate for GBP). Try not to pay foreign currency directly into a UK GBP account, as you won’t have control over the exchange rate and this will come with transfer fees. Revolut is good for small/temporary payments online, but is not suitable for larger money transfers, as it has a monthly limit on how much money you can convert without a subscription (and the subscription fees are not worth paying unless you want the silly bonuses they offer with them).

9. Keep your contact and address details up to date and update them as soon as you move house or if they change. This must be updated everywhere, including your banks, mobile provider, and any other institutions that have your details.

Part 3: Credit score

After you have set up all of your accounts, received all of your cards and subscriptions, and waited a few days/weeks for it to stabilise, you need to start caring about your credit score and history.

In the UK, there are three Credit Reference Agencies (CRAs) that exclusively determine your creditworthiness and have a ton of power over your financial life! These are:

• Experian
• Equifax
• TransUnion

You must register with all three of them as soon as you have a stable financial setup in the UK. The first two have online apps which let you see your credit score and credit report. The latter, TransUnion, only allows you to view a “Statutory Credit Report” (which you should also do).

You should do all the following things in each of the CRAs platforms:

• Ensure that your personal information is correct everywhere
• Ensure that your address is correct and the same everywhere
  • If it’s different, fix it with the bank or provider (not the CRA) immediately
• Ensure that your credit details and account status are up to date
• If you are not eligible to vote in the UK, Add a Notice of Correction to all the CRAs that says the following: “I {Full Name} am not eligible to register on the Electoral Register. I have lived in the UK since {Date} and can provide evidence of my residency at my address in the form of utility bills, bank statements, or student status.”

This last point is important if you are not a British citizen. All the CRAs will dock your credit score if you are not registered on the electoral roll on your address, since “lenders have no way of checking your identity” otherwise (kinda weird, since non-UK citizens exist, right?!) The only way to correct this is to add a Notice of Correction to all three CRAs, so that any applications you make are manually reviewed and so that this does not affect your creditworthiness. Of course, if you are eligible to vote, just register to vote at your address.

Important note about “credit scores”: The only thing that lenders/banks see from the CRAs is your full credit and repayment history, as well as all other factual details shown on your credit report. The concept of a “Credit Score” (the big number shown in the app) is fully a social construct and is never shown to actual lenders: it is only shown to you, is irrelevant to lenders, and cannot be compared between CRAs as they all use different scales. DO NOT SIGN UP TO ANY PAID SERVICE THAT CLAIMS TO BOOST YOUR CREDIT SCORE. Both Experian and Equifax will try sell you credit score boosting services for a monthly fee. It’s fine to take a free trial if offered, as it’s interesting to see what data they have on you. But make sure to unsubscribe immediately after subscribing (you will still keep the service for the whole trial period). Any free services, like Experian’s Boost service (which boosts your score/history by linking a high street bank account) are good and even recommended to use.

If you’ve just set up all your accounts for the first time, you will likely have a very lousy credit score, since UK lenders will not have any information on you and are unlikely to lend to you. Also, since you have just opened a bunch of new accounts, there will be two damaging factors to your score:

• The number of “fresh accounts” (under 12 months old) on your file, and
• The number of recent “hard searches” on your file. Every time you apply for anything credit-related, a “hard search” is registered on your credit report. If you have too many hard searches in a short period of time, lenders will think that you are “desperate for credit” (even though this is not usually the case!) and refuse any new applications automatically. It takes 3-6 months to recover from a hard search. Note that soft searches (ones you get for using comparison services and apps) are not visible to lenders and do not affect your credit score.

Don’t worry, all of this is fine at the moment. It will steadily grow as you spend time in the UK and use your accounts normally. This is also why it’s important to set up your financial life as soon as possible after getting to the UK, as it will let you have as long a financial history as possible. (But remember, if the best time was 3 months ago, the second-best time is still now :p)

However, it is still important to do other things to build a good credit history in the UK. The following sections will cover some ways to do this from scratch.

Part 4: Other useful apps to install

Apart from the obvious, like your banks’ and phone provider’s mobile apps, you should install and set up the following:

• Experian app, which lets you see your Experian credit report in a nice format
• ClearScore app, which lets you see your Equifax credit score and get useful credit tips
• MoneySuperMarket app, which lets you see your TransUnion score in a nice format, and gives amazing tips on finances. I suggest applying for any cards, loans, or insurances primarily through them

Some optional bonus apps:

• MoneySavingExpert app, which also lets you see your TransUnion credit score and get tips on saving money in everyday life
• CreditKarma app, which also lets you see your TransUnion credit score and compare credit services and get financial tips
• Emma app, which helps you budget and track which subscription services you’re paying for

Part 5: UK Government services (sidenote)

This isn’t directly related to your finances. However, there are multiple things you can do with the UK government that will make your life a little easier:

• Apply for a National Insurance Number, which will let you get paid from jobs and give you a single identity number to use in financial institutions. It comes by post to your registered address. You can let your bank know this number so that they can identify payments coming to you. You must also have one if you ever work in the UK, and not having one will delay you starting to work if you get a job
• Set up the Gov.UK One Login, which will let you log into government services and identify yourself online
• Set up the HMRC app, which will let you see your income details and taxation status
• Set up the NHS app to track your health information and GP registration
• If you have a foreign driving licence, exchange it for a British one by doing a little bit of paperwork. This has multiple benefits: a) insurance companies are likely to insure you for a LOT cheaper with one (or refuse to insure you if you have a non-UK licence) and b) it will give you a way to prove your identity and address to UK financial institutions, since the address is written on the licence. I had to send in my PHYSICAL passport and driving licence to a credit card company via post because I had an EU licence; had I converted it earlier I would have been able to do everything online. It is illegal to hold both a British and a non-British licence at the same time; your old licence will be revoked if you do the conversion.

Part 6: Credit card

The best way to get a credit history in the UK is to actively use a credit card. This may come as a shock to Europeans, who are used to thinking that using a debit card is better as relying on credit is bad. However, in the UK, lenders like to see that you can “responsibly manage your credit”, and a credit card is the one way they can see you doing that.

If you are new to the system, don’t be hopeful: you will not be eligible for a regular credit card to use for spreading purchases over multiple months. However, you will be eligible for a credit builder card, which has an insanely high APR (interest rate) and used exclusively to show lenders that you can repay the balance in full every month. That way, you are not charged any interest and can build your score up over the course of many months effectively!

There are many credit builder card companies in the UK, but they all use CapitalOne as the exclusive lender. So, unless you are in a weird situation, there is no reason to not just apply via CapitalOne directly. Do the following:

• Before applying, ensure that your address details are correct and the same everywhere and that you have high street bank statements from the last 3 months with your current address, as they need that to check your identity and income information.
• Use the MoneySuperMarket app to check what credit cards you’re eligible for
• If you’re pre-approved for some card, especially the CapitalOne classic card, just apply for it via the app. This gives you the best chances of being approved
• If you’re not pre-approved for any cards, you can try applying for the CapitalOne classic card directly through their website
• Note: your credit score can be too low to apply even for a CapitalOne card, especially if you’ve had multiple hard searches on your credit file recently (due to opening new accounts or contracts or otherwise). In that case, you may need to wait 3-6 months until being able to apply for a credit card. Applying too early without pre-approval can be risky, as applying results in a hard search which can reset the time when you can next apply to 3-6 months away. Consider waiting a little bit before applying if you are worried about this. There are still other ways in which you can build your credit score that you can find below.

Applying for your first credit card, especially through CapitalOne, may not be a quick process, as they will need to see all of your IDs, financial documentation, and bank statements, and they require you to send the files via physical post. I suggest using “Royal Mail Special Delivery Guaranteed by 1pm” if you are sending some very important documents such as passports to them. If they ask for bank statements, you need to go to your physical bank branch, ask them to print out the statements, and get them stamped in person to prove that they are the originals. CapitalOne does not accept statements that you have printed yourself at home. If you are confused, call them and ask for what is missing, as they can be a little opaque sometimes.

Part 7: Using your credit card

Some tips for using a credit card correctly:

• ALWAYS PAY OFF THE CREDIT CARD BALANCE IN FULL EVERY MONTH. This is the only thing that will show lenders that you can manage your credit correctly, especially if you have a “bad credit” card like CapitalOne Classic. Paying off the 35% APR interest instead of paying off the balance in full will be both ridiculously expensive and will damage your credit history similarly to missing a payment.
• NEVER EVER WITHDRAW CASH ON YOUR CREDIT CARD. This is an even bigger crime than withdrawing cash from your account and will irrepairably damage your credit score as lenders will think that “you are in such a bad financial situation that you need to take out cash to cover your finances”. Also, if they can’t track it, they find it suspicious and will think you are up to no good (which is stupid, but it is what it is).
• Use direct debits to pay off your credit card balance. Do not pay it off before the deadline manually; lenders like to see that you can hold the balance for the whole month before paying it off automatically.
• Keep your credit utilisation between 10% and 25% of the credit limit given to you. Some people say that the sweet spot is to use exactly 20% every month. This shows lenders that you “do not rely too much on credit” while also “responsibly using credit”. Using more shows that you are “too reliant on money you don’t have”, while using too little shows that “you do not have enough financial stability to pay off the credit card that you own”.
• If your credit card does not support contactless payments (ahem, CapitalOne), you can install the Curve Pay app to turn it into a contactless card without loss of functionality
• You can effectively use your credit card as a debit card if you have a second account set up for direct debits to pay off your balance, and just manually transfer the money you used on the credit card to sit on that account.

Part 8: Lifelines for people with zero credit history

Sometimes, you’ll be in a bit of a catch-22 situation where to build credit you need credit, but to get credit you need to have better credit. Remember, in the UK, the best way to build your credit score is to have reasonable credit agreements and use credit. However, if you can’t, here are a few tips as to what you can do:

1. Wait for a while. When the age of your credit accounts (current accounts in high street banks and your high street phone contract) gets high enough with no missed payments, your credit score will increase as well.
2. Purchase a mobile phone/tablet/laptop/headphones/other device for credit via your phone network provider. This is the only way you are likely to get into a proper “credit agreement” as a young person. This will also slightly increase the amount you pay for your phone bill, but just accept it as a necessary evil. Also, make sure to keep the debt for as long as possible. I made the mistake of paying off the debt for my new phone after a few months since I wanted to reduce the amount of debt I had. However, this meant that the phone purchase stopped boosting my credit score as lenders could no longer see that “I could repay debt regularly” anymore.
3. Report your rent payments to the CRAs. You can use the CreditLadder service to send reports to the CRAs every time you pay your rent on time via Direct Debit. Reporting to just one CRA (Experian is the best) is free; if you want to report to all three then you can pay them £8 per month or £60 per year. There are varying opinions on whether this is worth it or not, but reporting to just one won’t hurt you and may have a positive benefit (as long as you always pay your rent on time).
4. Loqbox offers a credit building service where they let you save up money to build credit. They give you a fake “loan” which you “repay” by paying in money to their savings account every month, and then the money is returned to you (with no interest) after a year. All the “repayments” are reported to the CRAs which build your credit history. Note: do not use their Loqbox Grow service, which is a £2.99 per week subscription which gives you a fake credit card that you cannot use that claims to also boost your score. Just sign up to the free trial and unsubscribe immediately if you want to use just the Loqbox Save service. Do not use this service if you have other ways of building credit, but if your credit history is completely empty then it’s worth a shot to have at least something on your record.
5. Never use “payday loans” or other “quick money loans”. That’s just plain stupid.

The end!

Hopefully this helped :) I recommend following everything in this tutorial over the course of a few months if possible. Do you have any other good UK credit tips? Let me know!