Does your US Credit Transfer to the UK?

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By Alexandra Severini

Credit scores are the technical, yet somehow elusive basis upon which each of us is deemed worthy or unworthy, financially speaking.

Though the concept of credit has existed for hundreds, even thousands, of years, a more systematic way of analyzing creditworthiness didn’t come about until the turn of the 20th century. Even then, there was much room for improvement.

By the late ‘60s, formal and informal public discourse called to refine and standardize the credit reporting system and in 1970 the Fair Credit Reporting Act was enacted. The Act sought to ensure that all information contained in one’s credit report was fair, accurate, and relevant to credit-based criteria. It also protected individuals’ credit from being viewed by unqualified entities.

By 1989, the FICO (or “credit”) score was introduced and by the late 1990s and early 2000s amendments were made to refine the act even further.

That explains credit reporting in America, “But what about credit reporting in other countries?” you ask.

International credit reporting systems

As you may expect, many countries around the world adhere to the use of a credit reporting system to calculate and qualify their citizens for certain credit and loans. Some have similar systems, others are quite different, and still others have no credit reporting at all.

Canada, for example, has a system that’s very similar to America’s. Their two major credit bureaus are TransUnion Canada and Equifax Canada. While they once had an Experian Credit Bureau, it closed in 2009. Credit scores in Canada range from 300-900, a 50-point difference from the 850 maximum credit score here in the states.

See an explanation of why credit scores do not transfer from Canada here..

Japan, on the other hand, does not have a centralized bureau or set of bureaus through which they learn about an individual’s credit score. Instead, most lending institutions such as large banks, credit companies, etc. conduct their own credit reconnaissance to determine whether they feel comfortable extending credit or a loan to an individual.

The UK is comprised of four countries:

  • England
  • Scotland
  • Wales
  • Northern Ireland

This United Kingdom follows a system that is comparable in some regards though different from ours in others. Below is a side by side breakdown:

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Back to the discussion …

Now that you can see how credit scores compare between the US and the UK, you might be wondering. “If I ever moved across the pond, would I be able to take my credit score with me?”

The short answer is no.

For a number of reasons, and despite the fact that Experian and Equifax have bureaus in both the US and UK, your credit score is as irrelevant overseas as is your GPA after college.

Because the criteria for which individuals are assessed differs so greatly from country-to-country as well as the myriad technology and databases used for tracking credit scores, the option of having a credit score that is applicable internationally is nonexistent.

That’s not to say that your US credit score no longer matters, but it certainly won’t help (or hinder) your efforts to open a credit card, apply for a loan, or buy a car in the UK.

With that said, it is wise to keep an eye on your domestic credit score and occasionally make payments if you’re out of the country for an extended time. As a general rule, if you leave the country with favorable credit, you’ll likely return with favorable credit but it doesn’t hurt to make minor purchases each month on your US credit card(s) that you know you’ll have no trouble paying off.

Once overseas, you’ll have to rely on building your UK credit from scratch. This isn’t an easy feat for US expats in the UK since the main criteria for assessing credit is based on citizenship and voting records. But it also isn’t impossible.

Here are some tips for getting started:

Get established with a UK address

Proof of residence is an important criteria for building UK credit. Whether applying for a loan or opening a credit card or bank account, having proof of address will work in your favor.

Be gainfully employed

Any lender is more comfortable signing off on an individual who can prove that they have a steady, paying work situation. If you’re unemployed, self-employed, or working on a contract or part-time basis, you may not be extended the best rates or any aid at all.

Open a bank account in the UK

Your best bet of doing this is to open an account in the US with a bank that has UK branches. That way, when you head overseas, you’ve already established a history with that bank.

Apply for credit cards with high interest rates

This may sound counterintuitive but here’s our logic...Just like in the US, no or low credit scores will only qualify you for credit cards and loans with high interest rates (if you can qualify at all). But if you get a card with high interest rates and are able to pay off the entire balance in full each month, you can build payment and credit history, without paying interest. Since interest usually only accrues if you miss payments or only pay the minimum balance due, paying off your balance can prevent interest rates from being an issue.

Put any and all bills in your name

Try to put all your bills in your name, so that you can get credit paying for them. While all your bills might not be included in your UK credit history (just like not all bills are included in your US credit history), there are some that could help.

Open one (or a couple) store cards

If you go this route, try not to use your store card often and be sure to pay them off in full each month. Consider store cards the low-hanging-fruit of credit building. They’re easy to obtain and, when used responsibly, can be a more accessible way to establish credit.

Bottom line

Whether you’re simply curious about the state of credit within individual countries or are planning to spend a while abroad, understanding how credit works could help keep you financially sound as you move around.

About the author

Alexandra Severini is a contributing writer for Self.

Editorial Policy

Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).

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Written on July 1, 2017
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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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