Does Your Credit Travel With You?


Whether it’s work or adventure that leads you to move overseas, it’s important to know how your finances and credit history can – or cannot – be affected by your move. Your credit score does not follow you as you move and settle into another country; however this has both advantages and disadvantages. For individuals, couples, and families who have maintained strong credit for years, it can be a strange to suddenly have to re-establish themselves by beginning anew. However, other countries have their own credit scoring systems, and your credit score in the United States, for example —however high it may be—will be of little to no use in Europe or Latin America.

This may sound like a loophole to many people, and a CNN story in October 2008 spoke to a Florida man who moved overseas to get away from $70,000 in private student loan debt as well as a man who left the country to find a better way to pay his $160,000 in student loan bills. However, one debt collection agency representative estimated to CNN that students abroad are only responsible for between 2 percent and 4 percent of delinquent student loan debt. Individuals who think that getting out of the U.S. is an easy way to leave bad credit histories behind them should know that taking such action can make bad problems even worse.

As CNBC noted in a February 2011 story, attempting to simply abandon a large amount of consumer debt will negatively impact your ability to obtain a visa. Not only will it be increasingly difficult to find work in another country, but legal action being taken against a consumer may continue in American courts even when the individual no longer resides there. While debt collectors would not be likely to take international legal action against a person who has left the country, that individual still leaves themselves open to possibly having accounts seized or wages garnished if they ever work for a U.S. employer again.

If you are committed to paying your debts and plan on moving abroad, you can take a few steps in advance to ease your transition to a new country and a new credit scoring system. As credit reporting and credit scoring expert John Ulzheimer wrote for the Business Insider this past September, you should check with your current credit card company to see if it reports to the country you are moving to. If not, look into that country’s banks or financial institutions. Starting with a blank slate in a new land may involve having to invest in a lower limit secured credit card, but you can also quickly see your limits increased with responsible and timely payments.

Perhaps most importantly, anybody moving out of the U.S. should keep their American accounts open and active. Even if you cannot see yourself moving back, it is important to understand that closing your accounts or leaving them inactive can negatively impact your U.S. credit score while you are away. You may want to consult credit experts for help with a credit score check if you are uncertain about your current rating. Many people leave small accounts open with a minimum cell phone contract just to keep it active without accumulating debt.

You should certainly take time to learn how credit works in the country you plan on moving to—or how commonly credit is actually used. Currency and the way credit is calculated can be different from country to country, and knowing what to expect beforehand can greatly help your new credit history get off to a glowing start.