Maintaining a solid credit standing is crucial for UK nationals living abroad who intend to invest in property back home. It can often be quite challenging due to the various hurdles associated with international finance. However, it isn’t an insurmountable task. In this article, we will guide you through various strategies that you can adopt to ensure your credit standing does not suffer while you’re overseas.
Establish a UK Address
Before we delve deeper into the details of maintaining your credit score, it’s important to understand that having a UK address plays a vital role in your credit standing. Lenders in the UK prefer customers who have an address within the country as it reduces their risk.
Even if you’re living abroad, it’s advisable to maintain a residential address in the UK. This could be your own home, a family member’s residence, or a friend’s house. You can register this address with banks, utility companies, and other credit providers, ensuring a continuous history of credit activity.
It’s also worth noting that you should keep your name on the electoral register at this address. This is key as credit reference agencies use this data, and it will significantly increase your chances of getting credit approved.
Keep UK Bank Accounts
Your next step should be to keep your UK bank accounts active. If you close all your UK-based accounts when you move abroad, it will seem like you have disappeared from the UK credit scene, which can affect your credit score negatively.
By keeping at least one UK bank account open and in use, you can continue to build and maintain your credit history. This doesn’t mean you have to make significant transactions. Small, regular transactions and payments towards the account can help keep your credit score alive and well.
It is also a good idea to keep a UK credit card active, using it periodically and paying off the balance. This will show lenders that you are capable of managing credit responsibly.
Pay Your Debts On Time
Keeping up with your financial commitments is another crucial strategy. Whether it is a credit card bill, a loan, or a utility bill associated with your UK address, make sure you pay your debts on time.
Late payments or, worse, defaulting on your debts can result in a significant credit score drop. So, even if you’re living in a different time zone, ensure that you’ve worked out a schedule that allows you to pay all your bills before their due dates.
You can set up direct debits to handle your payments automatically. This eliminates the risk of forgetting a payment and ensures that everything is paid on time.
Check Your Credit Report Regularly
Just as you would do when living in the UK, it’s important to check your credit report regularly. This allows you to monitor your credit standing and rectify any errors that might impact your score.
You can request a statutory credit report from each of the three main UK credit reference agencies: Experian, Equifax, and TransUnion. It’s advisable to check with all three as they might hold slightly different information about you.
If you spot any errors, report them to the credit reference agency immediately. Mistakes can range from a wrong address to inaccurate account information. Regular checks can help you ensure that your credit report is accurate.
Consider a Specialist Expat Mortgage Broker
Finally, when you’re ready to invest in property, consider working with a specialist expat mortgage broker. These professionals have a deep understanding of the credit requirements for expats and can help you navigate the complex process.
A specialist broker will have relationships with lenders who are comfortable working with expats, understand the challenges of living abroad, and are willing to consider overseas income.
Moreover, they can advise you on the best ways to prepare your finances for the mortgage application process, ensuring you have the best chance of approval.
In conclusion, while living abroad can pose challenges to maintaining your UK credit standing, it is certainly not impossible. By taking the right steps and remaining diligent, you can ensure that your credit score remains healthy, ready for when you decide to make that property investment back at home.
Utilise Credit-Building Products
An additional strategy for maintaining credit standing is to utilise credit-building products designed for people who want to build or improve their credit score. These are particularly useful for UK nationals living abroad who might not have regular financial activities in the UK.
Products such as credit-builder credit cards or loans can be beneficial. Credit-builder credit cards are designed for people with poor or minimal credit history. By using such a card regularly for small purchases and paying off the balance in full each month, you can demonstrate responsible credit usage.
Similarly, credit-builder loans work on the principle of making regular repayments over time, thus building a history of reliable payment. In this case, the money borrowed is held in an account by the lender and is not accessible until the loan is fully repaid.
However, it is important to be cautious. Make sure you fully understand the terms and conditions of these products before you use them. Failure to meet the repayment terms can negatively impact your credit standing rather than improving it.
Maintain a Regular Income in the UK
Having a regular income in the UK can also contribute to maintaining your credit standing. From a lender’s perspective, regular income indicates financial stability, which boosts your creditworthiness.
Even if you’re earning abroad, it’s worth considering ways to maintain some form of income in the UK. This could come from renting out your UK property, freelance work, or investments. The key is to ensure that this income is reported and taxed correctly in the UK.
Also, it’s advisable to keep these earnings in your UK bank account, as consistent deposits can demonstrate financial stability and reliability to lenders.
In conclusion, the task of maintaining a healthy credit standing while living abroad can be challenging but achievable. By ensuring a continuous UK address, keeping UK bank accounts active, paying your debts on time, regularly checking your credit report, utilising credit-building products, and maintaining a regular income in the UK, you can ensure your creditworthiness remains intact. Remember, careful planning and strategic financial management are your allies in this process. Stay ahead by being proactive and diligent, and you will be well-prepared for future property investments in the UK.
