How can I rebuild my credit score after living abroad?

When you live abroad, your UK credit history essentially goes into hibernation. Selin has experienced this first hand and found out she had a very low credit score after living in France for four years. This is not necessarily because you’re not creditworthy, it just means the agencies that give you a score don’t know what you’ve been up to.

So how can you build it back up?

Start from the basics, says Dani Palmer, chief marketing officer at Loqbox, a company that helps returning expats build a credit score.

‘Registering on the electoral roll is something really important that lenders like to see, securing a permanent UK address, opening or updating your UK bank account and then getting a mobile contract,’ she said.

Of course, this is easier said than done for many, and in particular women can face disproportionate difficulties, which we’ll go into next week.

But when it comes to the particular circumstance of living abroad, Palmer said: ‘There is a lot more people working abroad, living abroad, and it does feel a bit jarring that coming back home or going away can still feel so tricky with a few things such as a financial profile.’

Sometimes not having had any debt might also make it more difficult for lenders or credit agencies to assess your creditworthiness. Some suggest getting a credit card to be able to build up your credit score, but this is not always necessary.

And when you apply for credit, like a mortgage, a score from an agency isn’t the only thing lenders will rely on. You will still have a chance to argue your case and present yourself in the best light, even if you have a bad credit score from an agency. In the end, each lender will have their own criteria, and nowadays they use a lot more than just the score you’re given from a credit reference agency.

Selin also had a weird experience where she first tried to check her credit history through Experian, which said that they couldn’t confirm her identity and therefore couldn’t provide a score. Then she tried Equifax, which gave her a very low credit score, although the report on her didn’t show any negative factors, just that she wasn’t on the electoral register – which she is, but it just hasn’t updated yet. And finally, when she checked TransUnion, her credit score was actually in the fair range – not great, but still. We’re just curious how much of an impact being on the electoral register is going to have on all this (we’ll update you when the change is actually registered!)

There are countries that don’t rely on credit scores or credit reference agencies, as these can be problematic. Credit reference agencies rely on historical data and they use algorithms so they can be biased, particularly against women. They can also be a real issue because they often end up making economic inequality worse. They tend to hit low-income folks and minority groups the hardest, making it tough for them to get crucial things like housing and healthcare. Plus, credit scores can create a social ranking system that keeps people stuck in poverty, especially because the scoring system has built-in biases from the past.

Anyway, the earlier you think about all of this is better, in Palmer’s opinion.

‘Generally money and finances are still such a taboo topic, and people don't always love engaging with it. It's something that we can feel quite low confidence on or feel quite emotional about, and so a lot of people will tend to avoid it. So that's the hardest thing probably, actually getting people to feel comfortable about it and engage with their finances so that they can achieve what they want,’ she added.

Action of the week: Have you had to build your credit history from scratch? What did you do and how long did it take you? Let us know.