How to build a credit rating in the UK or US as an expat

Your credit rating is important. Without one, you’d struggle to secure a loan, take out a mobile phone contract or get a mortgage. Whether you’re living in the United Kingdom or the United Arab Emirates, having a decent credit rating in your native country will make you feel more financially secure, and give you a back-up should something go wrong in your new expat life. 

In this post, we’ve put together some of the ways in which you can build a credit rating in the UK or United States, even if you’re living as an expat in a country on the other side of the world.

Why should I maintain a credit rating in my native country?

If you’re financially settled in a new country and living as an expat, then you may be wondering why you should maintain your UK or US credit rating. It’s true that, whilst you’re living abroad, your UK or US credit rating won’t be much use to you, as credit scores don’t cross borders.

However, if you decide to move back to your native country after living abroad, and you’ve been expatting for more than six years, then you may need to build your credit history from scratch. Credit reference agencies only hold information for up to six years on people with UK home addresses, and similar timeframes apply in the United States, so securing a mortgage or a loan when you return home could be tough - neigh possible - if your credit rating no longer exists.

Building a UK credit rating

Without a credit rating in the United Kingdom, you’ll find it tough to access credit deals and other financial products, so it’s important that you maintain your UK credit rating when you’re living in another country - especially if your long-term goal is to return to the United Kingdom later in life.

Credit rating agencies like Experian and ClearScore hold information on closed bank and credit accounts for up to six years, so if you check your rating so long as you’re within the timeframe. Once you know your current score, you can work to improve it with these simple techniques.

First, you should make sure that you’re on the electoral roll. This helps banks and lenders check your address and prove your identity. The good news is that you can register as an overseas voter for up to 15 years after you leave the United Kingdom, as long as you’re a British citizen and you were registered to vote in the UK in the past.

You may decide to register to vote at a UK address, such as your parents’, so that you maintain a UK address, too. On the flipside, if you’re an EU citizen moving to the UK, you can register to vote when you become a resident, so get on the electoral register as soon as you possibly can.

Next, you should maintain your UK bank account. Getting proof of address and having a UK bank account in your name is good for your credit score, as it shows lenders that you can run an account responsibly and cover direct debits without going into the red. If you’ve already got a bank account in the UK, then consider a couple of small credit accounts, whether that’s a mobile phone, a store credit card or a small loan, all of which will up your credit rating over time. Even if you return to your new country, you can continue to pay these credit accounts from your bank. 

Next, think about setting up direct debit payments. You may decide to pay for utilities using a UK bank account, which will again show lenders that you have a strong payment history and that you are a responsible lender. If you still have a property in the United Kingdom, such as a rental property, then using a UK bank account for your income, insurance and fees makes sense and will help you to maintain and build upon your credit rating without physically being in the country.

Finally, review your credit rating regularly. What was once a complicated and expensive task is now free thanks to credit score apps, so check your score once a month. If you notice anything unusual, like a late payment or a misspelling of your name, you can then reach out to lenders and financial service providers and ask for those to be updated to maintain your credit score.

Building - or rebuilding - a US credit rating

Whether you’re originally from the US and you want to rebuild your credit score as an expat, or you want to move to the United States and build a credit rating before you get there, there are some things that you can do. As is always the case in finance, the earlier you start, the better.

Start by looking at your existing financial relationships. If your bank has a presence in the United States, for example, you may be able to use them to make the transition to the United States, opening new accounts and getting access to loans to assist with your move. As always, though, make sure you are getting the best deal. Staying with one company out of loyalty is a bad idea.

If you don’t have a bank account or a relationship with a lender, however, you can still build your credit rating. Your employer could assist, especially if they run an employee relocation program. If they don’t, they can still provide a letter to verify your employment and income, which you can use to show to potential lenders when opening a US bank account or applying for a loan.

Once you’ve signed up for a US bank account, then visit your local branch and apply for a credit card, bringing along supporting documentation, like a letter to verify employment, a copy of your credit report from the UK, and paperwork to confirm your identity. Simply signing up for a credit card and paying it back monthly will help to build your rating, but be sensible and spend wisely.

You could also look to working with a lender known to help immigrants. If you already have an American Express card, for example, you can apply to have your account switched to the United States, but factors such as having a US address and a minimum income come into play.

Friends and family can also help you to build your credit rating. If you’ve got family members that live in the United States, they could allow you to ‘piggyback’ on their credit accounts as an authorised user. This will boost your credit score, but you should note that any mistakes or late payments could hurt the primary account holder’s credit score and vice versa.

The truth is that, in order to apply for credit and build your score in the United States as an expat, you’ll need to jump through some hoops. Many banks are cautious about lending to those without a credit history in the country, so you’ll need to work hard to prove to them that you are not a risk. If you’ve tried these techniques and can’t secure finance to build your credit rating, you could look to applying for a card that’s designed for people with little to no credit. These cards are great short-term solutions and credit rating boosters but should be used with caution.

After six months of responsible borrowing, you should be able to build a positive credit rating in the United States. Of course, the longer you’re there and the more responsible you are, the higher your score will become, so stick to your good habits, even when you're out of the country as an expat, and maintain your score by paying back credit cards and mortgages on time.

Wrapping up

It can be easy to forget about credit scores in your native country, especially if you don’t plan to move back, but keeping them in order is a good idea for your long-term stability. Maintain a bank account, pay everything that’s due on time, and you’ll be able to keep a consistent credit rating in your home country, which may come in useful should you ever decide to return. Best of luck!

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