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The struggles in obtaining credit when you are new to the U.K.
blon
Posts: 72 Forumite
Hi all,
This forum is full of stories about people struggling to re-build a good credit history after periods of financial distress or outright bankruptcy in their earlier life. Let me tell you that this is nothing compared to the difficulties people face in trying to obtain decent credit when they are new to the U.K., even after a year of residency. From what I read, you have a better shot at decent offers by banks if you have been bankrupt earlier than if you come here for the first time and are an unknown in the databases of the credit scoring agencies.
It has been almost a year since my partner and moved from "Europe" to the U.K. We are highly qualified, have both doctorates and are on a above average household income. Yet, the only U.K. credit cards we have are two Aqua Reward cards whose cashback has been maxed out recently with a credit limit of GBP 250 (500 in total). A recent request for a credit limit increase on my card was rejected by Aqua. I had had the card for 7 months and always re-credited the account up to 10 times a month due to the low limit, I was never late for any payment. Yet I got rejected. They did not even grant me GBP 100 increase. Now I am supposed to wait another 6 months minimum before I ask again?! Hence we're stuck with a ridicuously low credit limit for another 6 months at least. The low credit limit also negatively impacts on our credit scores that at Experian (free trial, am not eligible for noddle as we do not have 5 years (!!!) of history of living in the U.K.) fluctuate between 760 and 820 depending on the current utilisation ratio at the time of reporting.
On the bank account side, it's no better. We needed an account when we arrived in order for our rent and salaries, so went to Santander where the only account type we were eligible for was the basic account. The account has nothing, no debit card, no credit card, forcing us to pay with our foreign-currency cards much of the time. The account even has a 10K cap on how much you can be in credit at any point in time. After 6 months, the Santander people at our local branch were willing to check whether we were eligible for a better account like the 1-2-3, however their system or back office declined it. We plan to try again after a full year has passed.
Of course we are on the electoral roll, we are on good salaries, live in a good postcode, always pay on time, and yet it feels impossible to obtain decent credit cards and bank accounts even after a year. Something feels wrong about this system that assumes you're a bad customer since they have not your history. It feels very discriminating. People within the European Union are supposed to be able to move around without too much unnecessary hassles, yet what we experience is a system that is geared against newcomers. You can certainly emphatise how frustrated we are. I wonder whether it's always been this way around here or whether it's just since the financial crisis that banks become much more reluctant to give credit than they were before?
Another concern is the bad customer service. Most of the time, you can't even reach the companies by email or a similar messeger service via their online platform (if they offer one, like Aqua, they normally fail to reply properly in a human way but just use standardised text elements, if there is any reply at all), you have to call them up and each time it takes you at 5-7 minutes to get through to somebody and pass security checks, that's 10-15 minutes wasted per call for things that could normally best be clarified by email.
Does anybody have a suggestion? I did the Barclaycard pre-check and it turns out I'm still not eligible for any of their cards. I applied for Capital One Classic Extra and did not get an immediate response as is normally the case, which means that somebody will look at my case probably. I'm supposed to get a response within 7 days but am not too optimistic. I would have applied for their Aspire World but laughed at their requirement that you have to be a homeowner - who would give me a mortgage if I can't even get a decent card?!
Should I add another subprime lender like Vanquis, just so to increase my total credit limit and lower my utilisation ratio. Would that work? What else do you recommend?
Would be especially thrilled at reading about the experience of people who've been in a similar situation, i.e., moved to the UK.
Thanks for reading this,
Bob
This forum is full of stories about people struggling to re-build a good credit history after periods of financial distress or outright bankruptcy in their earlier life. Let me tell you that this is nothing compared to the difficulties people face in trying to obtain decent credit when they are new to the U.K., even after a year of residency. From what I read, you have a better shot at decent offers by banks if you have been bankrupt earlier than if you come here for the first time and are an unknown in the databases of the credit scoring agencies.
It has been almost a year since my partner and moved from "Europe" to the U.K. We are highly qualified, have both doctorates and are on a above average household income. Yet, the only U.K. credit cards we have are two Aqua Reward cards whose cashback has been maxed out recently with a credit limit of GBP 250 (500 in total). A recent request for a credit limit increase on my card was rejected by Aqua. I had had the card for 7 months and always re-credited the account up to 10 times a month due to the low limit, I was never late for any payment. Yet I got rejected. They did not even grant me GBP 100 increase. Now I am supposed to wait another 6 months minimum before I ask again?! Hence we're stuck with a ridicuously low credit limit for another 6 months at least. The low credit limit also negatively impacts on our credit scores that at Experian (free trial, am not eligible for noddle as we do not have 5 years (!!!) of history of living in the U.K.) fluctuate between 760 and 820 depending on the current utilisation ratio at the time of reporting.
On the bank account side, it's no better. We needed an account when we arrived in order for our rent and salaries, so went to Santander where the only account type we were eligible for was the basic account. The account has nothing, no debit card, no credit card, forcing us to pay with our foreign-currency cards much of the time. The account even has a 10K cap on how much you can be in credit at any point in time. After 6 months, the Santander people at our local branch were willing to check whether we were eligible for a better account like the 1-2-3, however their system or back office declined it. We plan to try again after a full year has passed.
Of course we are on the electoral roll, we are on good salaries, live in a good postcode, always pay on time, and yet it feels impossible to obtain decent credit cards and bank accounts even after a year. Something feels wrong about this system that assumes you're a bad customer since they have not your history. It feels very discriminating. People within the European Union are supposed to be able to move around without too much unnecessary hassles, yet what we experience is a system that is geared against newcomers. You can certainly emphatise how frustrated we are. I wonder whether it's always been this way around here or whether it's just since the financial crisis that banks become much more reluctant to give credit than they were before?
Another concern is the bad customer service. Most of the time, you can't even reach the companies by email or a similar messeger service via their online platform (if they offer one, like Aqua, they normally fail to reply properly in a human way but just use standardised text elements, if there is any reply at all), you have to call them up and each time it takes you at 5-7 minutes to get through to somebody and pass security checks, that's 10-15 minutes wasted per call for things that could normally best be clarified by email.
Does anybody have a suggestion? I did the Barclaycard pre-check and it turns out I'm still not eligible for any of their cards. I applied for Capital One Classic Extra and did not get an immediate response as is normally the case, which means that somebody will look at my case probably. I'm supposed to get a response within 7 days but am not too optimistic. I would have applied for their Aspire World but laughed at their requirement that you have to be a homeowner - who would give me a mortgage if I can't even get a decent card?!
Should I add another subprime lender like Vanquis, just so to increase my total credit limit and lower my utilisation ratio. Would that work? What else do you recommend?
Would be especially thrilled at reading about the experience of people who've been in a similar situation, i.e., moved to the UK.
Thanks for reading this,
Bob
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Comments
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You say you have had an aqua reward card for over six months. This is very good.
With regards the limit increases my experiences are the same. This isn't a judgement on your credit worthiness, rather the fact they don't want cardholders making much cash back. They have stopped offering the account to new customers and reject increase requests from existing reward customers left right and centre.
Santander are widely regarded as having the worst customer service of all high street banks. They aren't all that bad by any measure. Aqua has unfortunately gone down hill since moving away from being part of HBOS, too. Vanquis are far worse though!
With regards getting credit elsewhere - The issue is one of stability - when applying for credit a lender wants to see that you've lived at your address, been with your bank, and been with your employer for 12-18 months at least.
They will also want to see a minimum of 12-18 months credit history with the likes of an aqua card.
Additionally they won't want to see any accounts opened in the last six months, and they don't want to see you having applied for more than one or two credit scored products in the last six months.
In summary, hold off the applications until you've paid your 12th aqua card bill.
When you have approach Barclays Bank for a current account and Barclaycard Initial. Make sure it is the Initial.
I reckon you'll be a shoe-in
Cashback Earned ¦ Nectar Points £68 ¦ Natoinwide Select £62 ¦ Aqua Reward £100 ¦ Amex Platinum £48
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Why the rush to build your credit rating? If as you say you earn good salaries then why the requirement for credit?
Time is the only way of establishing a good record. Sometimes there's no way of speeding matters up.0 -
I totally agree with you that the situation is very ridicules as the banks are busy speculating with deposits in the derivative markets and laundering Mexican gangs proceeds instead of doing what they are supposed to do. I really can't understand why a bank refuses to open a saving account which has no credit facility and hence holds zero risk to its balance sheet!
Did you try to obtain credit cards from other sub-prime lenders like Vanquis and Luma?0 -
I will tell you why banks are careful when offering credit to new to UK customers - it is a higher risk that they will abscond without repaying.manami_mnm wrote: »I totally agree with you that the situation is very ridicules as the banks are busy speculating with deposits in the derivative markets and laundering Mexican gangs proceeds instead of doing what they are supposed to do. I really can't understand why a bank refuses to open a saving account which has no credit facility and hence holds zero risk to its balance sheet!
Did you try to obtain credit cards from other sub-prime lenders like Vanquis and Luma?0 -
jonesMUFCforever wrote: »I will tell you why banks are careful when offering credit to new to UK customers - it is a higher risk that they will abscond without repaying.
Part of the bank business is to take risk and mitigate it with higher returns. I really can't understand why there is no secured credit card in the UK market that is available for people who really need it. I know that Capital One used to provide such in the past, but they didn't provide it to every one although it has zero risk for them since it was secured. Still, non-credit products like saving accounts bear no risk for the bank if the customer absconded.0 -
Vanquis provide credit to anyone who has a pulse if they really are desperate, so no need for a secured card, but the OP already has a better line of credit than Vanquis offer, from Aqua.Cashback Earned ¦ Nectar Points £68 ¦ Natoinwide Select £62 ¦ Aqua Reward £100 ¦ Amex Platinum £48
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Why do you need credit? Just pay for what you need out of your incomes. Problem (if there was one i can't see it anyway) solved.0
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They don't provide credit to everyone as they refuse some, like me 9 months ago.Vanquis provide credit to anyone who has a pulse if they really are desperate, so no need for a secured card, but the OP already has a better line of credit than Vanquis offer, from Aqua.
Credit cards are used as instrument of payment with their advantages over cash and not just as form of debit.Why do you need credit? Just pay for what you need out of your incomes. Problem (if there was one i can't see it anyway) solved.0 -
If you open up an account with no funds to deposit, just with your salaries to go into it, then sure, getting credit will take a few years. UIf instead you had come over with £30k or £40k, e.g. the equity from selling a house, then, when you opened up the accounts, AND opened up a fee paying account, like e.g. an HSBC Advance or Premier account, the bank's computer would have made you entirely different offers from the start.
Plus, it depends which bank you join. RBS/Natwest, HBOS/Halifax and Lloyds were all bailed out by the government. So they are quite conservative when it comes to new customers. Overseas banks, like Santander, aren't going to be much good either.
If you had approached it differently, as in going into the banks and asking what they could offer you, assuming you had funds to invest and good jobs, you might have got a different response.
Also, it's good if you start banking with the host country target bank, if possible, prior to arriving. When we came, we had already been HSBC's customer in another country for some years. Even without this, an introductory letter from whichever bank you used in the country you were last in would have been useful.0 -
manami_mnm wrote: »Credit cards are used as instrument of payment with their advantages over cash and not just as form of debit.
What advantages?0
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