In the United States, our credit report and score are an important part of our financial life. Your score has a direct impact on where you can live, what you can buy and even what jobs you can get. For those of us who have grown up under this credit regime, it’s hard to imagine anything else. If you are moving abroad, things are about to change (and it won’t just be the side of the road you are driving on). In addition to the experience of a new culture, you are likely to be facing a new credit reporting and scoring system. Here are three things you should know before you go.
- Credit reporting and scoring varies vastly from country to country: You don’t have to look far to see that other countries have different philosophies and methods of assessing risk. In Latin America, cash is still king and credit is less widely used. In Australia, only negative information is reported. In Europe it varies by country but generally lenders focus on your salary, family situation, debts, residence status and other information. According to FICO, their scores are used in more than 20 countries; however, the factors and weights applied to those factors will be different than here in the US. The bottom line is, while the major factors for determining credit worthiness are similar across the world (payment history, amount of debt, etc.) every country will have a different way of obtaining, organizing and analyzing that information. Educate yourself before you move so you know what kind of lending climate you will be entering into.
- You will be starting fresh: For better or for worse, your US credit report/score will not transfer to your new country. Consumer laws and lending philosophies are tied to culture and vary from country to country. Since you won’t have a history when you arrive, be prepared to pay cash (or high interest rates). If you have a positive history, you should order a hard copy of your US credit report and any other record of positive bill payment before you go. Have it on hand so that lenders can see how you have handled credit in the past. Be sure you understand the steps needed to build your credit in your new home and get started as soon as possible once you arrive.
- Your US credit/report and score will need to be maintained: Your US score will need some attention while you are gone if you ever plan to move back. Actually, it’s probably best to keep it up either way, you never know where life is going to take you. Keep a few cards open and use them occasionally for non-location specific purchases (such as e-books from Amazon or music downloads from Apple). You can also use them when you go home to visit. Many creditors will close your cards if you are inactive for 3-6 months. Be sure to read the fine print so that you can maintain your positive account information on your report.
If you are new to the US or you didn’t maintain your credit report while you were away, Apprisen has plenty of resources to help you get started building credit in the US. Call us at 800-355-2227 to schedule an appointment or visit our website to chat with a financial services specialist today!