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How To Build Credit from Scratch As a Young Adult Or Recent Immigrant To the UK?

To build credit from scratch as a young adult or recent immigrant to the UK you can open a basic bank account, get a secured or credit builder card, and register on the electoral roll. Just remember to use credit responsibly.
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Building credit can be a daunting process, especially for young adults and those who are new to the UK. In this comprehensive guide, we explore the different ways you can build your credit score and gain access to financial products like loans or mortgages. 

Let’s learn how to build a good credit score that will serve you well in the future!

What is credit and why is it important?

Credit is a financial agreement in which a borrower agrees to receive funds from a lender and repay those funds, plus any interest and fees specified, over a set period of time. 

Credit is important because it allows people to finance large purchases, such as homes and cars, or consolidate debt. It can also help to build a person's credit history, which is important for securing loans in the future.

When used responsibly, credit can be a valuable tool. However, when misused, it can lead to financial difficulties. This is why it’s important to build your credit history as much as possible.

Understanding your credit score

Your credit score is a number that represents your creditworthiness. It is used by lenders to determine whether you are a good candidate for a loan and what interest rate they will offer you. 

There are four main factors that go into your credit score:

  1. Payment history: This includes whether you have made your payments on time and if you have any missed or late payments.

  2. Credit utilisation: This is the amount of debt you have relative to your credit limit. It's important to keep this number low, as it shows that you're not maxing out your credit cards and using all of your available credit.

  3. Length of credit history: A longer credit history is generally better than a shorter one. This shows lenders that you've been managing your finances responsibly over a longer period of time.

  4. Types of credit: The mix of different types of credit (e.g., mortgage, car finance, student loan, credit card) in your credit file also matters. Having a diversified mix shows that you can handle different types of debt responsibly

The three main credit reference agencies (CRAs) in the UK are TransUnion, Equifax, and Experian. They each have their own unique credit scoring model. Credit scores usually range from around 0 to 1,000 so your score might differ between the various CRAs.

However, keep in mind that when you’ve immigrated to the UK you won’t have a credit profile and you’ll effectively have a clean slate.

This means you’ll need to start building credit in one or more ways to get a credit score and then continue improving your credit score and credit profile over time.

Ways to Build Credit From Scratch

There are a few things you can do to help build your credit from scratch. Let’s look at a few easy ways that  you can build your credit history as a young adult or recent immigrant to the UK.

Credit builder credit card

One way is to get a credit builder card. This type of credit card allows you to build up your credit by making small payments over time. 

With a credit builder credit card, you will typically have lower initial credit limits as lenders need to reduce their risk but this means they may also come with higher APRs.

When using a credit builder card, use your credit but spend wisely - always pay back as much as possible. Paying back more every month also means you’ll pay less interest.

Make sure all payments are on time. You can also set up a Direct Debit to ensure that your payments are automatically paid on time every month.

Set up a UK bank account

Opening a bank account is a great way to show that you are responsible and want to build your credit. If you have an overdraft, make sure that you never spend up to your full limit.

Staying well below your overdraft limit will also keep your credit utilisation ratio low, which is another positive signal for potential creditors.

Get on the electoral roll

This is one of the most important ways to start building credit and also one of the first things credit reference agencies look for. Registering on the electoral roll is easy and you can register online on the Government website

Get a mobile phone account

A mobile phone contract can help you as it’s technically a credit agreement. Just make sure you make monthly payments on time and don’t skip any payments.

What to Do If You Make a Mistake With Credit

If you make a mistake with credit, it is important to take action immediately to minimise the damage. The first step is to assess the situation and determine what went wrong. 

If you made a late payment, for example, you will want to ensure you pay all future bills on time. If you’ve missed a payment or defaulted on a loan, you’ll need to contact your lender and work out a repayment plan.

Once you have taken steps to rectify the situation, you will need to monitor your credit report closely. You can obtain a free copy of your credit report once every 12 months from each of the CRAs. Review your report carefully and look for any mistakes or errors. 

If you find any incorrect information, dispute it with the credit bureau in writing.

Finally, take steps to improve your credit score. Pay all of your bills on time, keep balances low on your credit cards, and avoid opening new accounts unless absolutely necessary. 

By following these simple steps, you can rebuild your credit history and get back on track financially.

Understanding Different Types of Credit

There are many different types of loans and credit cards available in the UK, and it can be difficult to know which one is right for you. 

Here is a brief overview of some of the most common types of credit cards and loans:

Personal loans

Personal loans are typically unsecured, meaning they don't require an asset to back them up such as a house.

This makes them a good option for people with bad or no credit, as there is no risk of losing your home or car if you default on the loan. If, for example, you want to consolidate several debts, pay for wedding expenses, or even finance a home improvement project, a personal loan can be a flexible credit option. 

Credit cards

Credit cards are one of the most popular types of borrowing in the UK. They can be used for everyday purchases, such as groceries or petrol, or for larger purchases, such as holidays or new furniture. 

Credit cards usually have fairly high interest rates, so it is important to try to pay off your balance in full each month. If you only make minimum payments, you will end up paying a lot in interest over time.

Secured loans

Secured loans are backed by collateral, such as your home or car. This means that if you default on the loan, the lender can take your property. 

Because of this risk, secured loans usually have lower interest rates than unsecured loans. They can be an option for people with bad credit who need to borrow a large amount of money.

Alternatives to building credit

There are a few alternatives to building credit from scratch. One is to become an authorised user on someone else's credit card account. This means that you can use their credit card and their payment history will appear on your credit report. 

A viable option is to get a secured credit card. A secured credit card is backed by a deposit you make with the issuer, which becomes your credit limit. 

Making regular, on-time payments with a secured card can help you build positive credit history and improve the odds for you to get an unsecured credit card in the future.


Building credit from scratch can be a daunting task, especially for young adults or recent immigrants to the UK. However, with the right knowledge and determination, it is possible to build up your credit score and make informed financial decisions that will benefit you in the long run. 

By understanding how lenders assess applications and taking advantage of products such as prepaid cards, it is possible to start building a strong foundation of good credit history. 

With patience, persistence, and dedication you can become creditworthy within a relatively short period of time.

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