If you work for a multinational, an international organization, a government agency, or the military, it’s not unusual to live in several different countries over the course of your career. For instance, if you’re in the field of supply chain management, your company may need to send people to live in other countries to build relationships with suppliers, manufacturers, and distributors in key countries.
If you’re transferred in the line of your work, or even if you just decide to emigrate, you may wonder how your credit is affected when you move to another country.
After establishing good credit in your own country, you’ll probably want to benefit from it in your new country. After all, it’s perfectly reasonable to expect that you’ll probably have a lot of unexpected expenses. You may also have some big ticket expenses like getting furniture and appliances for your new apartment or buying a car.
However, the simple truth is that you will not be able to take your good credit with you. You will have to pay cash for everything.
On the flip side, if you didn’t have good credit, it won’t follow you either. Now is your chance to start over.
So, the bottom line is that neither good nor bad credit is transferable when you move to another country. This, of course can be either good or bad new depending on how well you’ve been playing the credit game.
The reason for this nontransferable credit is credit reporting laws are different for each country.
This is true even if the credit reporting agency in your home country is a multinational agency. For instant, Equifax and Experian operate both in the United States and in the U.K. However, these agencies can only report credit for the people of the country it’s operating in.
So, for example, if you moved from Birmingham, Alabama, to Nottingham, Nottinghamshire County, which is in the East Midlands of England, Equifax and Experian would only have your credit score in the United States. Neither your good or bad credit history would transfer to the UK. As far as these two credit reporting companies are concerned, your UK credit score is a clean slate.
Essentially, then, you’ll have to start from scratch. You will have to get the credit ball rolling all over again.
Your Existing Credit Score
Your credit score in your original country stays the same. However, if your credit score is good, there is really no reason to shut your accounts down—even if you plan on permanently leaving the country.
You should keep it open for two reasons:
One: you may change your mind and decide to return to your home country someday.
Two: you can always use your good credit when you return for a visit.
Transferring Good Accounts
Although the credit reporting agency will not transfer your good credit, you can get a multinational company that has business operations in both countries to transfer your account your account from your home country to your new country. Naturally, not all companies will be willing to do this for you, and it is not a good idea to make this request if you have missed a few payments now and then.
On their Facebook page, CreditRepair.com recently shared a strategy for how to get credit reporting if you are labeled “unscorable.” You can use this same strategy to create a credit history in your new country. Incidentally, the term “unscorable” is not synonymous with “bad credit” or “credit risk.” It simply means that the credit reporting agency has no information to use to create a meaningful score. Since they can’t calculate your score, you are considered “unscorable.” Children, for instance, are “unscorable” because they have no score.
Why You Need Credit
Credit makes your life easier. A person with credit can get a loan or rent an apartment. There are numerous circumstances in modern life that make it useful to have a credit card.
7 Steps to Build Credit History
Here are some specific ways to gradually build your credit history in the new country you move to:
- Begin with a secured card. This is a card that works like a credit card, except that it is tied to money deposited in an account.
- Gradually, get other accounts in your name like an apartment lease, utilities, and a credit card.
- Use all these accounts responsibly. You have to use all your accounts. You can’t, for example only use your credit card for emergencies. Instead, you have to actively use your credit accounts. However, you have to use your credit accounts carefully. This means that you should only charge for things that you can pay in full every month. Partial, late, or missed payments can hurt your credit score.
- Only use 30% of your credit. For instance, if you get credit for $2, 000, you should only use up to $600. Another thing you can do is to ask the credit card company for a bigger balance, but don’t use it. This way you have a larger volume of available credit.
- Only open a small number of accounts at a time. All you need to establish credit history is a couple of accounts. This will prevent multiple credit inquiries when you buy something that requires a credit check. It’s fine to have a number of credit cards, but open them up slowly and use them sparingly.
- If you decide that you don’t want to use a particular credit account, don’t close it. Instead, let it sit inactive. This will then serve as evidence to establish that you had a certain line of credit that you used responsibly.
- Finally, be patient. It takes time to build credit.
It may be either a surprise or relief to realize that there is no such thing as international credit for individuals. Credit scores do not transfer from one country to another. Fortunately, this does not mean that you can’t build up your credit. Following these 7 steps, it will be easy to gradually build up good credit in your new country.