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Setting up your finances when you move to a new country can be time consuming and difficult. 

Happily, things have come a long way over the past couple of decades, and in the UK it’s actually pretty straightforward to set up a current account for day-to-day spending.

However, loans for foreigners who are new to the UK are a different matter, and in general, it’s difficult to secure credit unless you’ve been in the country for several years.

That’s not all there is to it though: in this article, we’ll explain why it’s difficult for new arrivals to the UK to access a personal loan, and provide some options and suggestions that can help.

And if you want to look at one option right away, Koyo uses Open Banking technology so that we can base our lending decisions on your real financial situation – rather than what someone else says about you. Find out more at Representative APR 27%. Otherwise, read on!

. That means that they’re able to view your income and spending, making it easier for them to verify that you’ll be able to pay back a loan and comfortably afford the repayments.

Can you get a loan if you’ve just moved to the UK?

Generally speaking, no, for two reasons.

  • Most lenders like to lend to borrowers with a good credit score (more on those later), and one of the key determining factors of your credit score is the length of time you’ve been in the UK, and whether you’ve previously paid off debts in the UK.

  • Irrespective of your credit score, most mainstream lenders will want to see some basic information, such as proof of address, which you’ll generally only have after you’ve been in the UK for a few months or more

Why is this? When deciding who to lend money to, most lenders focus on a number of important things: one is your track record, particularly when it comes to loan repayments. If you recently moved to the UK, you haven’t built up a track record yet, so lenders can’t be sure that you’re a good prospect, or that a personal loan is right for you.

Lenders don’t tend to publicly disclose their eligibility criteria, but anecdotally, many require that you’ve been in the UK for 3 years before you’re eligible for a personal loan.

What credit score do you need to get a loan in the UK?

First, a quick explanation of what a credit score is. Regardless of the reason why you’re applying for a personal loan, before you take out credit, a lender wants to check how likely you are to pay it back, and whether you’ll be able to comfortably afford the repayments. 

One of the surest ways to do this is to lend to people who have already successfully made monthly repayments on a loan in the past and paid it off. After all, if you were betting on a horse, would you pick one who’s already performed well in ten races or one who was running for the first time?

To do this, banks turn to Credit Reference Agencies (CRAs) who keep a record of everyone in the UK who borrows money, whether that’s through a credit card, personal loan, mortgage or even an overdraft. 

Credit reference agencies assign a “score” to would-be borrowers, which is based on several factors, including:

  • Whether you appear on the electoral roll

  • Whether you have successfully paid off credit with monthly payments in the past

  • The proportion of credit available to you which you are using

  • Whether you have a UK bank account

If you’ve recently moved to the UK, you’re likely to have a very low score, making it hard to get a loan. That means that most new arrivals to the UK will need to build up their score before they’re eligible for a loan with the majority of UK lenders.

However, not all lenders rely on your credit score - later in the article we’ll cover Open Banking lenders, who focus on your current account data instead.

What if I have a good credit score in another country?

Unfortunately, your credit score doesn’t follow you from one country to another. Lenders (or indeed CRAs) can’t see the credit history you’ve built up outside of the UK, such as the total amount you might have outstanding in other countries. (1)

That means that your best course of action is likely to be to build up a good credit score in the UK.

What can I do to improve my credit score?

We’ve put together a guide on how to build a credit score in the UK. The key points include:

  1. Get on the electoral roll

  2. Put household bills in your own name, and be sure to pay them on time (direct debit comes in handy here)

  3. Open a UK bank account

  4. Check your credit report - which is free - to track any progress you’ve made

What types of loans are available to new UK residents?

Unfortunately, very few - if any - mainstream loan providers offer loans to people new to the UK. 

Koyo offers loans to people who have been in the UK for at least one year, and many other loan providers require a longer stay in the UK before you’re eligible.

However, a loan isn’t the only way to access credit: depending on how long you’ve been in the UK, it might be possible for you to access a credit card, although this is likely to come with a high interest rate (usually displayed as an annual percentage rate, or APR) and a low credit limit. 

Although this is an expensive way to access credit, it can be a useful way to build up a credit score, making it easier to access credit in future.

What is open banking and how can it help foreigners get a loan in the UK?

Some lenders - such as Koyo - use Open Banking technology to securely view your bank account data
a visual guide to how Open Banking loans can help younger borrowers

As a result, Open Banking lenders rely less on your credit score and place more of an emphasis on how affordable a loan is for you, after factoring in your income and living costs.

To be eligible for a loan with Koyo, borrowers need to have been resident in the UK for at least 12 months, and need to have an income, paid into their current account, for further eligibility information visit;

Open Banking lenders may also require fewer documents during the application process: more information on this in our guide to what documents are required for a personal loan.

What if your loan application is rejected?

When you apply for a loan, the lender may carry out what’s known as a “hard” credit search. This leaves a trace on your credit file, and if you’re rejected for credit too many times, it could look like a sign of financial distress to the lender, affecting your credit rating. For that reason, if you are rejected for a loan, it’s important to stop and consider your options (for example going with a lower loan amount), rather than immediately applying via another provider.

It can be worth using an eligibility calculator before you apply, in order to avoid applying for loans you’re likely to be rejected for, and it’s also possible to apply to some lenders without leaving a trace on your credit file - for example, Koyo initially conducts a soft credit search, meaning that an application enquiry will not affect your credit score.

Image showing how avoiding searches can help you to get a car loan with bad credit

Want to know more? We’ve put together a full guide to how credit checks work, as well as an article on common reasons for personal loan rejection.

Next steps

Unfortunately, it really is a challenge for people new to the UK to access credit. New developments such as Open Banking do make the process easier, but in general, people new to the UK will need to build up a credit history over a period of months or years. 

However, by taking the time to improve your eligibility for credit in the UK, you’re setting yourself up for the long term - and will be able to gradually build up a credit history that will make it easy to borrow in future.

For more general information, you might also want to take a look at our guide to loans for first-time borrowers in the UK and how to get approved for a loan.

Frequently asked questions about loans for foreigners in the UK

Can foreigners get loans in the UK?

Absolutely - you don’t need to have a UK passport in order to access credit in the UK. However, most lenders will only consider applicants who have been in the UK for a reasonably long time - in general, a year at the very least, but usually more than that. This includes all forms of unsecured loan - such as home improvement loans, debt consolidation loans and car loans - but you might find that other forms of credit (such as hire purchase) are still available to you. 

Can foreign nationals get a mortgage in the UK?

Yes - but as explained above, lenders will generally only consider applications from borrowers who have been resident in the UK for at least a year or so - and for mortgages, the conditions tend to be even more stringent.

Which loan is easiest to get for foreigners in the UK?

Every lender has different requirements, and those requirements are complex, meaning that there’s no “one size fits all” best option. However, Open Banking lenders such as Koyo are less reliant on credit scores, meaning that they may be able to consider borrowers who have only been in the UK for as little as one year.

Do I need an income to get a loan in the UK?

It’s very difficult to get a loan without an income. When considering an application, the first thing a lender wants to know is whether a borrower is likely to be able to pay it back, meaning that a regular income is one of the key factors that most lenders look for.

If you’ve been in the UK for 12 months or more, you may be eligible for an Open Banking loan from Koyo. By using Open Banking technology Koyo is able to base lending decisions on your real financial situation – rather than what someone else says about you. Find out more and view a representative example at Representative APR 27%.



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