Employment Issues
General information about working and in the UK can be found at the government website:
https:www.gov.uk/contacts jobcentre-plus
N.I Number
The National Insurance Number is one of the biggest concerns for new arrivals in the UK.
What is a National Insurance Number?
The UK National Insurance(NI) number is a unique number made up of letters and numbers, allocated by the UK Department for Works and Pensions.
It is basically used by the Department for Works and Pensions and the HM Revenue & Customs to identify a person.
A person keeps the same NI number of life. Every number assigned is unique and only used for one particular individual.
It is assigned to persons over the age of 16 in order to make sure that their National Insurance contributions and Tax are recorded against their name. HM Revenue & Customs also use this number to ensure that a person pays the correct amount of tax every year.
The NI number is also used as a reference number in communication between a person and the Department for Work and Pensions, and HM Revenue & Customs (HMRC) respectively.
The NI Number is displayed on a person’s payslip; P60; tax letters and benefits. It is also on the National Insurance section of a person’s personal tax account.
Who needs a National Insurance Number?
All persons who want to work in the UK, have to get a NI number. Persons who do not have an NI number have to apply for one.
It is only possible to apply for one’s NI number once you are in the UK. You have to have the right to work or study in the UK before you are able to apply for your National Insurance number.
Some migrants already have the National Insurance Number printed on the back of their Biometric Residence Permit (BRP).
There are a number of organisations that will require your NI number.
What will happen if I do not have a National Insurance Number?
It is possible to start work in the UK before your NI number arrives. However, you have to be able to prove that you can work in the UK. You have to inform your employer that you have applied for an NI number and provide them with the number as soon as you receive it.
How do I apply for my National Insurance Number?
In order to apply for your NI number, you have to phone the National Insurance number application line in the UK. You can phone them on 0800 141 2075, or by textphone on 0800 141 2438. To learn more about .N.I please go to www.gov.uk/apply-national-insurance-number
For self employed contractors please visit https://www.gov.uk/employment-status/selfemployed-contractor
JOB SITES
job sites include https://www.linkedin.com, https://uk.indeed.com,
You may also inquire on Google to identify jobs it’s for specific industries of your choice.
Types of Employment
It is important that you find out what your employment status is and understand how it affects your rights.
There are 3 main employment statuses:
- employee
- worker
- self-employed
If you’re an employee, you have rights at work. If you’re a worker, you’ll also have rights at work but not as many as an employee. If you’re self-employed, you usually only have the rights your contract says you have.
Your employment status depends on what actually happens when you’re at work. That might not be the same as what your contract says about your status.
An employer might try to call you ‘self-employed’ when you’re actually an employee or worker. Employers sometimes do this to take away their employees’ employment rights.
If you think your employer has done this you can:
- raise a grievance based on what you think your status is
- take your employer to an employment tribunal
Check if you’re employed or self-employed for tax reasons
The rules about whether you count as employed or self-employed for tax reasons are slightly different. You can check your employment status for tax on GOV.UK.
Check if you’re an employee
You’re an employee if:
- your employer is in charge of what work you do and how you should go about it on a day to day basis (even if you’re left alone to actually do the work)
- under your contract you have to do the work yourself – you can’t pass it onto someone else
- your contract guarantees you at least a minimum number of hours of work each week or month – and you have to do it
Check if you’re a worker
You’re probably a worker if:
- under your contract you have to do the work you’re given yourself – you can’t pass it on to someone else
- your employer isn’t a client or customer of a business that you run
You can check what rights you have if you’re a worker on GOV.UK.
If you’re not guaranteed to get any work
This is sometimes called having a ‘zero-hours’ contract. You’ll be a worker as long as you have to do the work yourself and you’re not running a business.
In some rare cases you might be able to show you’re an employee instead. Talk to an adviser if you’re on a zero-hours contract and you want to use a right that only employees have.
For example, you might be able to claim unfair dismissal if you’ve been on a zero-hours contract for more than 2 years and you can show you’re an employee.
If you work for an agency
If your agency sends you to different clients, you’re called an ‘agency worker’.
Check your contract – you’re a worker unless your contract says you’re an employee. You can check your rights as an agency worker.
In some cases you might have a contract with an ‘umbrella company’ instead of the agency. Check your contract if you’re not sure.
If you have a contract with an umbrella company, you’re usually an employee. Find out more about umbrella companies on GOV.UK.
If you’re not sure about your employment status
Talk to an adviser if your employment rights depend on your status.
Enterpreneurship
There are also immense opportunities in entrepreneurship. It is advisable to research deeply commencing from www.gov.uk for any governmental requirements there may be in your chosen sector/business before committing any resources. Other useful sites include:
Entrepreneurship In UK | How To Become An Entrepreneur | Entrepreneurs UK
Entrepreneurship – GOV.UK (www.gov.uk)
Support and funding for young entrepreneurs | Start Up Loans
The Credit System in the UK
How does the UK credit score system work? A comprehensive guide
9 MAY 2022
Your credit score is like your financial CV.
Suppliers and lenders will use it to verify your identity and gauge your credibility. If you keep a healthy credit score, you’ll have wider access to credit and loans, and your reputation amongst creditors and suppliers will strengthen your financial options.
To understand what constitutes your credit score, you’ll need to understand the UK credit score system.
Why are credit scores important?
Your credit score is like a visa that gives you access to types of credit and lending opportunities, like taking out a mobile phone contract, financing a car or getting a mortgage.
When you apply for a loan, lease or retail credit in the UK, lenders pull a credit report to check your financial history. Your credit score is included in this report, and it rates your creditworthiness according to your financial history.
Lenders will likely examine your score and explore the good and bad activities in your report. Creditors want to see that you have a reliable track record of paying your bills before they approve you for funding.
While lenders consider other factors like your income or account history, your credit score is critical. Here are just a few of the lending decisions creditors make based on your credit score, among other factors:
- Whether to approve or deny your application
- What your credit limit will be
- How high your interest rates will be
Your personal credit score can also impact your access to business capital. If your business is new, it can take time to establish a business credit score. Until then, creditors consider your personal credit score in any loan applications.
Top Tip: Building a good business credit score is important, but it takes time. Learn what makes a good business credit score and 14 ways to improve it. You may visit various sites like business credit scores ⏳, Credit Monitor – Check Your Score For Free | MoneySuperMarket
How are personal and business credit scores calculated in the UK?
The UK credit score system centres around three main credit reference agencies (CRAs): Experian, Equifax and TransUnion. Each one collects information from creditors and factors these into an algorithm that calculates your credit score.
Each CRA uses a unique rating scale and may receive different data points. As a result, your credit score rating differs between agencies.
10 activities that affect your personal credit score points
While the CRAs are somewhat secretive about their formulas, these activities are known to have a big impact on your score.
- Defaulting on credit agreements. Unfortunately, failing to pay back what you’ve borrowed is the biggest way you can damage your credit score and will affect your score for up to six years.
- Receiving a County Court Judgment. A CCJ, or a court summons for debt collections, will bring down your score quite harshly.
- Late payments and missed payments. Paying late or missing just one repayment can hurt your credit score.
- Staying under or going over your credit limit. CRAs penalise you for using more than 90% of your credit limit and reward you when you stay well under your limit.
- Too few credit accounts. CRAs want to see that you can make payments with multiple accounts over time.
- Paying off your credit card each month. Lenders like to see that you can clear your balance each month and avoid the snowball effect of interest.
- No account changes for six months. Lenders like to see financial consistency, stability and longevity.
- More than £15,000 in credit card debt. Lenders view excessive debt as a risk factor and may decide that you can’t keep up with additional debt.
- Updating your electoral registration. Signing up for the electoral register helps CRAs verify your identity.
- Holding the same credit card for over five years. Sticking with the same credit card carrier also demonstrates consistency, stability and longevity that lenders like to see.
What is a good personal credit score? What is a good business credit score?
As we’ve covered, TransUnion, Experian and Equifax assign you a personal credit score number between 0 and 1,000 based on your credit history. Each lender uses a different scoring system.
This number places you in one of six brackets based on a credit score range, usually from “Very Poor” to “Excellent” (these vary slightly by CRA).
This rating tells creditors how likely you are to repay your bill. It also tells you how likely you are to receive credit and the good interest rates. Remember, if your business is new, lenders will use your personal credit score to evaluate your creditworthiness for a loan.
| TransUnion credit score range (0–710) | Experian credit score range (0–999) | Equifax credit score range (0–1,000) | |
| Very Poor | 0–550 | 0–560 | – |
| Poor | 561–565 | 561–720 | 0–438 |
| Fair | 566–603 | 721–880 | 439–530 |
| Good | 604–627 | 881–960 | 531–670 |
| Very Good | – | – | 671–810 |
| Excellent | 628–710 | 961–999 | 811–1,000 |
What impact does your credit score bracket have? Here’s how Experian categorises your potential for credit with each bracket:
- Very poor. You’re more likely to be refused most credit cards, loans and mortgages.
- Poor. You might be accepted for credit cards, loans and mortgages but they may have higher interest rates.
- Fair. You might get OK interest rates but your credit limits may not be very high.
- Good. You should get most credit cards, loans and mortgages but you might not get the very best deals.
- Excellent. You should get the best credit cards, loans and mortgages (but there are no guarantees).
The buckets are useful in showing that there’s a wide range to credit scores; it’s more complex than just “good credit” and “bad credit”.
In addition to predicting your likelihood of being approved for credit, they predict the quality of rates and diversity of credit options you may be offered.
Top Tip: Want to know more about where you stand? We dive into good credit scores and poor credit scores, and what to do if you fall into the latter category, in our article on credit score brackets 💳
An introduction to business credit score brackets
Like your personal score, your business score signals your creditworthiness to potential lenders. CRAs factor in a business’s longevity, financial history and credit utilisation ratio in its business credit score. Business credit scores range from 0 to 100, with 100 being the highest possible score.
As you can see from Experian’s business brackets below, there’s a wide range of categorisations. For the best possible rates and credit limits, aim for a score above 90.
| Failing company | 0 |
| Imminently-failing company | 0–1 |
| Maximum-risk company | 2–15 |
| High-risk company | 16–25 |
| Above-average risk company | 25–50 |
| Below-average risk company | 51–80 |
| Low-risk company | 81–90 |
| Very low-risk company | 91–100 |
What’s in a UK credit report?
A credit file or report is a document containing a detailed financial history and credit rating for you. A credit score is the number that the CRA assigns to you on a scale of 0 to 1,000.
Here is what a credit report contains in the UK:
- Public records. Your registration on the electoral rolls, any county court judgments (CCJs), insolvencies, or bankruptcies.
- Address history. A list of current and former addresses.
- Credit applications. How many applications for credit you’ve made, including those not approved.
- Financial history. A list of your active credit cards, loans, mortgages, mobile phone contracts, or car loans.
- Negative financial events. Any overdrawn accounts (not including within authorised overdraft limits) and late or missed payments.
- Financial associates. Anyone with whom you share a joint account, mortgage note, or loan.
Lenders want to see that you are a real person with a verified address. They want to see that you have a history of managing multiple bank accounts and that you pay your bills on time.
Crucially, they want to note any red flags like defaults, insolvencies or CCJs. They also want to make sure that you don’t already have too much debt relative to your income.
How to check and improve your UK credit score
If you’re not sure what your credit score is, you’ll want to find out. You may have heard that checking your credit score negatively affects your score, but there are ways to check it (called a “soft check”) that don’t affect your score at all.
How to check your credit score for free in the UK
Consumers have a right to access their credit report for free under the UK’s Consumer Credit Report of 1974.
Here are several websites where you can check your credit score:
- ClearScore offers a free credit report and score using data from Equifax. ClearScore updates its reporting weekly and provides insights about ways to improve your score.
- Credit Karma (formerly Noddle) also offers a free credit report using data from TransUnion and updates its report weekly.
- A free Experian account offers consumers a chance to check their score with updates every 30 days.
- CheckMyFile offers a 30-day free trial to check your score. The advantage of this tool is its side-by-side comparison of your score at all three CRAs: Equifax, Experian and TransUnion.
You can check your credit score with the CRAs directly. They have limited features with a free account and will prompt you to create a paid account after a free trial to access their full features, including report changes and tips to improve your score.
Checking your business credit score
As a business owner, it’s important to know your business credit score before applying for a loan. Though there are some free options, a business credit reporting service is an investment that may save you money in the long run.
- Creditsafe offers a 30-day free trial to check your business credit score or the credit score of another business you work with.
- The My Business Profile service by Experian (with a three-month trial option) monitors your business credit score, identifies five top factors affecting your score and alerts you in real-time to any changes.
- Equifax offers businesses the right to request a Business Statutory Credit Report by submitting an application. Once Equifax has finished security checks and accepted the application, they will mail a credit report within seven days.
- Credit Passport offers both free and paid subscription models with varying features to understand and monitor your business credit. Credit Passport’s reports use bank data to create its insights.
- D&B Credit Monitor is a business credit reporting service by Dunn & Bradstreet that informs customers about their credit score, payment score and cash flow risk score.
Top Tip: Checking your business credit score lets you know your eligibility to get financing. It’s different to checking your personal credit score, however. Learn how business credit scores work plus more ways to check in our guide on how to check your business credit score 🔎
Ways to improve your credit score
There are many things you can do to improve your personal credit score. Some can be done quickly, while others take time.
- Open two or more accounts that will appear on a credit file. If you don’t have a credit history, you won’t have a good score.
- Don’t borrow more than you can afford.
- Pay your bills on time every month. If you can’t pay the balance in full, pay at least the minimum payment amount.
- Monitor your accounts and report any errors, fraud or lost cards.
- Register on the electoral rolls, and update your information if you move.
- Don’t apply for multiple credit cards at once. Too many credit applications can be a cause for concern, especially if some are rejected.
- Keep well below your credit limit. Under 30% is best. For instance, if you have a credit limit of £5,000, borrow no more than £1,500.
- Hold onto your cards for at least five years. CRAs give you bonus points for longevity of accounts.
Top Tip: There are things you can do to improve your business credit score. Learn how to qualify for better business financing options in our guide on how to increase your business credit score 📈
Wrapping up
Once you understand how the UK credit score system works, you have the knowledge you need to work toward your financial goals.
First, know your score. Use one of the recommended sites above to check your credit report and set up monitoring to prevent errors or fraud from impacting your score. Next, write down your goals, whether it’s a new business line of credit or improved rates and limits for existing ones.
Last, follow our tips and guidance to make the UK credit score system work for you. While there is no magic bullet to fix your credit overnight, you can start good financial habits to raise your score over time.
