If you plan to pack up and move to another country, here’s one thing you can’t take with you: your credit score.
Credit scores are not shared between countries, partly because data protection laws vary. If you plan to live as an expatriate, here are a few things you should know.
Your credit score won’t follow you around the world
Leaving your credit score back in the States may sound appealing if you want to escape your debts by moving abroad. It’s not that simple. Often, when you apply for a visa in another country, your debt will be examined. If it appears you’re trying to avoid paying off debt, your application will likely be denied.
Maybe you’ve been good about repaying debt. You may have other reasons why you want to join U.S. expats in popular destinations like the United Kingdom, Australia and Mexico. You still can’t take your credit score. You may, however, be able to get along using U.S.-issued credit cards, but you’ll want to stick with those that have no foreign transaction fees, and be sure to keep a U.S. bank account open, because you’ll need to pay the balance in U.S. currency. If you want to establish new credit in a different country, you can open an account, perhaps a secured card, to begin to build credit in your new country of residence.
You’ll find a world of difference from country to country in how credit scoring and credit reports work. In the U.K., for example, registering to vote can help your credit; in the U.S., voter information is not included in your credit reports.
An example: How scores differ in Canada
To get an idea of how credit-scoring customs can vary abroad, look no further than our neighbor to the north, Canada.
Canada’s credit scoring is similar to the U.S. system. For instance:
Scores range from 300 to 900, and higher is better.
The two major credit reporting bureaus are TransUnion Canada and Equifax Canada.
Scores are calculated using five factors: payment history, outstanding debt, credit account history, recent inquiries and types of credit.
This differs slightly from the U.S. system, which has scores ranging from 300 to 850 and has one additional reporting bureau, Experian. Like Canadians, we also have five factors that determine our credit scores: payment history, credit utilization, length of credit history, types of credit in use and new credit.
If you had excellent credit in the U.S., you may be able to use it in Canada. According to a Canadian government website, some financial institutions will consider using U.S. scores if asked.
It’s smart to get copies of your U.S. credit reports and scores if you think they could work to your benefit, and it never hurts to ask if they could be considered.
However, you should be prepared to establish credit in the country where you are living. It could come in handy if you are looking to rent a home, buy property or get a cell phone. And it will be simpler to budget if you are not forever having to convert currency.
To prepare yourself for a move across borders, it’s wise to research how credit works in the new country so that you’ll know exactly what to do to begin to build credit.
How to preserve your U.S. credit profile
If you leave the United States to live as an expat for a while, remember to maintain your U.S. credit for when you return. This will be easy if you occasionally use your U.S. credit cards. With electronic delivery of bills and payment in U.S. dollars, keeping your credit report current should not be a problem. You could even consider putting recurring charges on a card and putting payment on autopay to keep an account open and current.