The struggles in obtaining credit when you are new to the U.K.

gt94sss2

blon wrote: »

Will consider switching from Santander to Barclays. Did not think it would make such a big difference?! Otherwise I would have just asked Santander for the 1-2-3 in a month as they told me I would be eligible after one full year.

@dktreesea: We arrived on a Thursday and started work on Monday, so we have almost worked for 12 months now. We are on a 6-digit household income, so I do not think that our jobs or salaries are the issue.

I suggest you try HSBC rather than Barclays first - if nothing else, HSBC pay much more attention to 'account conduct' rather than external credit ratings if you need additional products.

As others have said - I would also stop applying for credit. Even if you're not successful, these are recorded on your credit files and too many in a short time will make it harder to get future credit.

Also, I would keep your Santander account open for a while once you've opened a new account somewhere else.

Regards
Sunil

dktreesea

andyuk01 wrote: »

Only you can see what type of card you have, when someone else searches your credit file they will just see Credit Card / Unsecured Loan / Communications etc etc

The limit, utilisation, payment history, time open can all make a difference but the type of card doesn't

That's true. But, just like a Wonga loan just shows up as a Wonga loan, prime lenders, looking at that, will know that this is a money lender who specialises in lending to sub prime customers.

If a mainstream lender looks at someone's credit profile and just sees lenders who are not mainstream lending to the customer, they may conclude that this customer is not one they fancy on their books.

starryshell

I'm in the UK as a Swiss citizen, so I'm not on the electoral roll.

I didn't have a job when I first arrived, and went to Lloyds. They gave me a basic bank account, a debit card that could only be used at their bank machines, etc.

After I secured a permanent job, I asked for an upgrade to the account (a bit over a year later), and was essentially laughed out of the office.

I went around the corner to Barclays, and applied for an account there. I was granted a normal current account, with an overdraft, with no muss or fuss.

After keeping that account for a year, they offered me a credit card. I also applied and obtained an Aqua card during this period.

Recently, they've given me a 0% balance transfer on their credit card, and since I've had it have regularly upped the credit limit. I've also had my overdraft limit raised, along with having a loan offered to me every time I log in or go into the branch.

I've also been able to lease a car with one of the big manufacturers without question.

From what I've seen, there's a huge discrepancy in how people new to the UK are financially treated, and it doesn't seem to go along bank branches, nationality, EU citizenship, visa type, etc.

Thrugelmir

starryshell wrote: »

From what I've seen, there's a huge discrepancy in how people new to the UK are financially treated,

Similar rules increasingly apply now to most new borrowers. The right to "credit" is something which has to be earnt. Days are gone of banks throwing money around like confetti. Freedom of movement across borders brings its own issues from a granting of credit perspective.

starryshell

Thrugelmir wrote: »

Similar rules increasingly apply now to most new borrowers. The right to "credit" is something which has to be earnt. Days are gone of banks throwing money around like confetti. Freedom of movement across borders brings its own issues from a granting of credit perspective.

Good point.

I moved here nearly 3.5 years ago, so my experience has all been post-credit-crunch.

andyuk01

dktreesea wrote: »

That's true. But, just like a Wonga loan just shows up as a Wonga loan, prime lenders, looking at that, will know that this is a money lender who specialises in lending to sub prime customers.

If a mainstream lender looks at someone's credit profile and just sees lenders who are not mainstream lending to the customer, they may conclude that this customer is not one they fancy on their books.

Nope - A wonga loan would show up as an advance against income, same as a quickquid loan, payday uk loan, toothfairy etc etc

A personal loan from coutts would show up as a personal loan, exactly the same as one from Barclays or any other bank

You are the only one who can see who you have an account with, people searching your credit file and can infer what they like from the presence of advances against income (Ie payday loans) but they cant see who they are from

blon

Thrugelmir wrote: »

Similar rules increasingly apply now to most new borrowers. The right to "credit" is something which has to be earnt. Days are gone of banks throwing money around like confetti. Freedom of movement across borders brings its own issues from a granting of credit perspective.

Yes, it has to be earned, but in today's times of high cross-boder mobility of individuals, creditworthiness is something that should not have to be earned over and over again every time you move to another country. What we need is cross-border credit scoring, based on internationally operating credit rating agencies that collect credit information from (for example) all EU member countries. The EU may be over-regulating many sectors, but if the EU issued a regulation that credit scoring agencies have to take credit scores into account that have been earned in other members states that would be true progress. Problem solved.

derfo

I moved to UK from US in 2012 and I took the steps below to kick start my credit profile. I originally started off with a HSBC passport account and am now with First Direct.

1 - Put on my credit reports (Experian and Equifax) that I cannot be on the Electoral Register due to my immigration status.
2 - I had an AMEX in USA and I was able to get an AMEX account here (£8500 Credit Limit). Opening date of account : Apr 2012
3 - Opened a Cashplus Credit Builder account
4 - Got a monthly mobile contract with TMO in June 2012.
5 - First Direct Current account but with £250 overdraft.
6 - Have a Joint Current account with my spouse at MetroBank.

xkpa

Let me share my story too. My first visit to the UK was in May 2008. Back then I was easily offered a current account from Lloyds TSB with £100 overdraft. Then I come back to the UK in April 2012. My first steps was:

1. April 2012 - opened Barclays current account
2. May 2012 - provisional driving license
3. June 2012 - O2 SIM only 12 months contract
4. June 2012 - Cashplus creditbuilder card (which is settled in July 2013)
5. July 2012 - T-Mobile 24 months mobile contact with phone
6. August 2012 - Registered on the electoral roll
7. August 2012 - Opened Santander current account
8. January 2013 - Switched to Halifax from Barclays
9. May 2013 - Upgraded my O2 contract with O2 refresh tariff for another 24 months, so now I have additional credit agreement with O2 showed as loan in my Equifax Credit Report
10. June 2013 - Opened Nationwide FlexPlus account with £10 monthly fee

I am paying for everything, not a single missed/late payment and here is where the interesting part starts. In the end of June 2013 I have applied for credit cards starting with sub primes.

Was declined with CapitalOne and Vanquish (!!!) then applied for Barclaycard Initial, because they was sent me 2 pre-approval applications at my address.

They approved me at 1st of July and on 2nd of July they closed my Barclaycard, because of some additional security checks and gave me £50 for closing my account!?? I think the issue was that I was logged in my Barclaycard internet banking when I was in Bulgaria and they saw it as a risk.

So what else I need to do to show the lenders that they can trust me, I am paying everything, it is really frustrated. Cheers

blon

Was declined for the Capital One Classic Extra card today.

To sum it up, this is my U.K. banking history so far:

1. Sep 2012: Moved to U.K., started job immediately, opened Santander basic account with no debit, overdraft and balance cap of GBP 10K. Account is joint with partner. Household income is in the low 6-digits (both PAYE full-time employees).
2. Oct 2012: Got on electoral roll
3. Dec 2012: Got Aqua Reward Card with GBP 250 credit limit and 49.9% APR.
4. March 2013: Santander local branch thought they could upgrade me to 1-2-3 account after 6 months but got rejected by their computer. They suggested to re-try after a full year.
4. May 2013: Joined Experian Credit report for 2 months, no wrong entries, Aqua card appears, no late payments recoreded, electoral roll recorded. Score fluctuates between 760 and 820 depending on how much I use my card (high balance = lower score)
5. July 2013: Asked Aqua for credit limit increase, declined. (I assume no credit search was carried out then). Never missed any payment of course. Paid GBP 1000 per month into the account on average because of low limit, so they should be able to see that I can afford a higher limit. This did not help though.
6. August 2013: Got rejected for Capital One Classic Extra cashback card. Given reason: too low credit score. They give the possibility to appeal the decision in which case the appeal will be reviewed by a special team. As I have nothing to lose with them anymore, I will try this providing payslips and statements of my foreign cards that indicate my high credit limit and low APR.

Conclusion: It appears the decisions by many lenders are purely machinal. The credit scoring models are flawed in the case of newcomers to the UK because they disregard the good credit history they have built up in their country of origin. Reading this forum, it's easy to see that people who have lived in the UK forever but have had times of bad credit behaviour can quickly obtain high-grade financial products again. Newcomers even get declined by low-grade products. In other words: It's much much easier to rebuild good credit than to build good credit from scratch.

Plan going forward: Ask for letter of recommendation from my foreign bank I've banked with for about 10 years, as somebody suggested here, and then use this to apply for normal bank account with overdraft at high street banks that are less machinal and more human in their decision-making. Will in any case apply in September, after my 1-year anniversary of living here, regardless of my recent credit search with Capital One. I just can't wait for 6 months between each search as the thing is that one needs credit to build up a credit score. My conclusion from successful movers in previous posts is that you have to target the right banks early on who will not just look at the scores (that will be bad because you have no history) but appreciate one's financial situation in a more comprehensive manner, taking factors into account the scoring models leave out.