How can I build a credit record?

Q How does one get around the credit rating system here? I am a UK citizen and after living abroad for many years due to my husband's work, we've now been living in London for almost three years. We have credit cards from Amex and an account in Spain but have been turned down for credit cards by several banks here, even though we have an annual income of more than ?100,000, a steady job, no debts and substantial savings.

MF

A As strange as it may seem, your having no debts might well be the key to why credit card companies are turning you down. They only way they can make money is by charging people interest and if you're the sort of person who usually clears your credit card debt in full, they're unlikely to make much cash from you.

What they like to see is a credit file showing a steady and regular repayment of debt. From the sounds of it, your current credit record is pretty bare - you don't mention having a UK bank account or mortgage. Are you registered to vote? The electoral register is another key to getting credit as providers like to see proof that their customers have a solid, permanent address in the UK.

One way to build a credit record might be to buy something for your home - such as a sofa or a fridge - on credit, even if you can afford to pay for it in cash, and then make the regular repayments until it is paid off.

In-store credit agreements tend to be easier to get than credit cards and unsecured personal loans - sales staff practically throw them at most customers. Unfortunately, the interest rate on these agreements can be quite high. Even where 'interest-free' credit is offered, the cost of the credit has usually been worked into the price of the goods, so one way or the other you're likely to be paying over the odds (though you might consider that a small price to pay for building a credit file).

Just don't get talked into buying an extended warranty for whatever you buy as these insurance policies are generally over-priced and often offer poor cover to boot.