Moving around the world as an expat has some big benefits, but it can also have some downsides. One of the big negatives is not being able to get credit in a new country to buy big-ticket items. Find out why and what you might be able to do to build your score…
If you stay put in a country most of your working life you can build up a solid credit history, and most likely get bombarded with offers from credit card companies to take out loans. Most of those offers are too good to be true (handy for the first few months on 0% APR yes, but then deadly once you reach the cut-off date and find the APR goes up to a whopping 28% or more). When you move overseas or move back home you may struggle to get any credit offers at all.
The credit system is based on crunching individual’s historical data. If you have no data in a country’s credit system – as a newly arrived expat you won’t – there’s nothing for a company wanting to sell you a sofa, car, or phone to base your application for credit on.
Even more essential, you could find your application to rent a property could be denied because landlords in many countries check potential renters’ credit ratings too. If there’s no history, they will more than likely let the property to the next person with a credit history rather than you, with your so-called “thin-file”. A “thin-file” is the term given to someone who has a little if any credit history in a country’s data bank.
Tips to help expats
Gradually building up credit seems to be the most common course of action. Different countries have different credit scoring rules, reporting and ways to build credit. In the UK, for example, it’s essential to get on the electoral roll at your UK address. However, that’s only possible if you are British, Irish, a qualifying Commonwealth citizen, or from an EU member state. (Find out more about the UK electoral roll here.)
To help expats transfer their credit history from one country to another, Aire, a new data crunching and credit history company, is building a programme to establish an international “financial passport”. Find out more about Aire here.
The Huffington Post’s article ‘How Do Credit Scores Work in Other Countries?‘ provides a useful review of the different way credit is assessed in Europe, South Africa, South-east Asia, Asia and Australasia.
The three main credit reporting companies in the UK are Callcredit, Equifax and Experian. The latter has helpful information in ‘5 top tips to improve your Experian credit score’. As part of that article, an expat who has returned to the UK after six years asks in their comment section about improving/reinstating her credit score. Experian’s help desk suggests the expat writes a ‘Notice of Correction’ which is explanatory note that can be added to an entry on your credit report to explain the background to that information. Experian writes: “Anyone searching your report in the future or who has seen it in the previous six months will see the Notice of Correction, and they must take account of it when you apply for credit.”
Find out how to check your credit report in the UK from the Money Advice Service.
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