How Important Is Your UK Credit Score To Getting A UK Expat Mortgage?
With any mortgage application, your credit history and score are major factors considered by lenders. So, if you’re an expat living and working abroad, and looking to buy in the UK, you may be worrying that your lack of UK credit history will prevent you from securing a good mortgage deal.
The good news is that you don’t need to have a polished expat UK credit score, and many specialist expat lenders are set up to check your expat borrowing status by other means.
But it’s also worth considering the benefits of maintaining your financial ties with the UK, as this can make things a lot easier.
We’ll guide you through the important things you need to know about your UK credit rating as an expat, and we’ll also outline the steps you can take to establish and preserve a solid credit footprint for the future.
Do I need a good UK credit score to secure an expat mortgage?
The reassuring answer to this common question is no; your UK credit score or rating is not a defining factor in your UK mortgage application.
It is true that a good UK credit footprint might open the door to more favourable rates and terms, but there are specialist lenders who are willing to overlook a less than perfect UK credit rating.
This is because expat lenders will only require your UK address history for the last 3 years, so if you have been living abroad for longer than that, they will not always be able to check your credit profile through Experian, Equifax or one of the other credit reference agencies.
So, if your current credit score in the UK is poor, this does not mean you’re excluded from accessing a mortgage.
The crucial difference between your credit score and credit history
A Specialist expat lender is set up to validate your borrowing status in more nuanced ways. They won’t just run a check on your credit file to get a 3-digit number from the likes of Experian. They’ll look to you to provide evidence of your creditworthiness by providing documentation that proves you are able to afford the property finance you’re looking for.
The Expat mortgage lenders more willing to take this view, are best approached through a specialist expat mortgage broker as they are not widely available.
What will expat lenders look for in your credit history?
To satisfy an expat lender’s application criteria, you’ll need to make sure you have the following documentation in place:
- 3 months of healthy bank statements – showing you’re not spending more than you’re earning (and no overdraft facility!)
- Up to date utility and mobile phone bills which have been paid on time, even if they are registered to your address abroad
- Any Credit card loan statements (even if not UK based) paid on time
- Disclosure of any personal loans, car finance etc with 3 months of statements - and proof that repayments have been made on time
All the above will help to show a mortgage lender that the content of your credit history is good, even if your UK credit score isn’t.
How can I maintain or improve my UK credit score while living abroad?
It is possible to maintain and keep a healthy UK credit score while living abroad. If you’ve neglected this, it’s never too late to start, and if you’re moving abroad soon, you can take these steps from the start to keep things in order.
- Ensure you remain on the UK electoral roll - you can continue to register as an overseas voter for up to 15 years after you leave the UK if you’re a British citizen and you were registered to vote in the UK in the past. You can also register to vote from at A UK address, for example your parents’, to maintain a UK address.
- Hold a UK current account - keeping or opening a new account in your name is an excellent way of propping up your UK credit score. And you can build on this by keeping a UK mobile phone or store card account open.
- Set up direct debits – Paying any direct debits through your UK current account is another effective way to show lenders you are creditworthy.
- If you rent out a house in the UK, aim to receive rental payments into your UK bank account and pay any insurance or maintenance costs from that account.
- Clean up your credit profile – check your UK credit score and if there are any blips, aim to get them removed. If you have a good reason to have any missed payments or previous CCJs, you can apply for a ‘notice of correction’ to be applied to your credit report.
- Beware of Challenger and Mobile banks – there are lots of benefits associated with these newly emerging internet-only banks, but it’s worth recognising that many of them do not communicate with credit agencies such as Experian. It’s definitely worth checking this out if you’re looking to build up your credit profile in the UK.
Expat Mortgages are generally seen as ‘higher risk’ products for lenders, which means they come with higher interest rates to offset the potential risk involved. For anyone with a less than perfect UK credit rating, this can make it even harder to access at attractive rates.
However, there are several specialist lenders who are more than willing to assess your unique situation and take a view.
This is where our expert mortgage brokers can help.
We have extensive knowledge and connections with the expat lending market and can help you get the best mortgage deal available today. If you have any concerns regarding your UK credit profile and how it might affect your mortgage application, we can help.
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