How Will Moving Countries Impact Your Credit Score?

will-moving-countries-impact-credit-score

Credit scoring methods change from country to country—and changing countries could mean starting over from square one.

You’re here because you want to know how moving to a new country will impact your credit. Maybe you’re planning to move because you need a change of pace or because you have a great new job opportunity—or maybe you’re having credit issues and specifically wondering whether moving countries could fix your problems.

Either way, you’ve come to the right place. We spoke to people who moved countries and found out what sort of change, if any, taking your credit score across a border causes.

Spoiler alert: There will be changes.


Wait, what’s a credit score?

Before we get into how moving to a new country will affect your credit score, let’s quickly make sure we all know exactly what a credit score is.

Your credit score is a three-digit number created through information gathered by the three major credit bureaus: Experian, TransUnion, and Equifax. This number is used by all manner of lenders to determine if they’ll lend to you and at what rate.

In general, a score above 720 is considered a great credit score, while 719 to 680 is considered good credit, and anything below 550 is considered poor credit.

Your credit score can have a big impact on nearly every aspect of your life, from educational to professional, so you’ll definitely want to pay all of your bills on time and pay off your debts whenever possible to keep your score as high as possible.

To learn more about how credit scores work, check out our Know Your Credit Score blog series.

Move out of the US and your score will basically reset to zero.

You may not be surprised to learn that moving to a new country has a major impact on your credit score. You may be surprised to learn that some other countries have a very different approach to credit.

“As someone who has moved countries and moved back, I can confirm that moving countries can have various effects on your credit score—not all of them desirable,” advised Ben Taylor, a writer who has lived in the United Kingdom and Portugal and offers advice for freelancers at Home Working Club (@homeworkingclub).

“Not all countries have the kind of sophisticated credit scoring systems people are used to in places like the UK and the USA. In some countries (Portugal is an example), applications for credit have a more significant ‘manual’ element with more human decision-making involved.”

But even though the US and UK have similar credit systems (Experian is a UK company, after all) that doesn’t mean your credit score carries over when you move across the Atlantic. Nick Brennan, founder and CEO of MyUKSIMCard.com (@UKSimCard), learned that lesson first-hand:

“I moved to London a year ago so I have a unique perspective on what happens to your credit score. Here are the main points:

“Everything resets to zero. The slate is wiped clean! That can be a good thing (if you have a bad credit score in your home country) but it can be a bad thing too (if you have a good credit score). I was the latter, and I found I couldn’t even initially get a $50USD/month postpaid/contract cell phone plan because I didn’t have any credit history. So in a way having no credit history was just like having a bad credit history.

You can build your credit with just a few credit card transactions a month.

“I started getting myself a credit history by doing a few little things,” says Brennan.

“Applying for a couple of low limit credit cards and immediately putting some transactions on them and then paying the bill in full each month. This started giving positive marks on my credit file. Even if you keep using your USA credit card for most transactions, just put a few small transactions each month on the local credit card so that your repayment history is uploaded monthly to your credit file by the credit card provider.

“Putting my name on the electoral roll for my local council (in the UK, non-citizens can vote in their local council elections). My name on the electoral roll is placed on the credit file and assists with your credit score (it shows further ‘proof’ of your residential address).

“Setting up a local UK bank account and having my utilities paid automatically through the bank account. Again this started giving positive marks on my credit file.

“In the UK, one of the main credit reporting agencies is Experian. They have a service where you can pay a small amount to get a copy of your credit file. This is a good way to see the criteria they use when scoring and then try to fill in those blanks, but also to monitor any issues on the file (for example if they have confused you with someone else with a bad credit history).

“Over the ensuing 12 months, I saw my credit score go from very poor, to poor, to fair, to good, to now excellent! I achieved this through the methods above and ensuring the credit cards were paid in full each month and the utility bills were being automatically paid from my bank account.”

But what if you’re just moving across a land border?

The same thing happens if you move to the US, even from Canada.

You might understand that you’ll have to go through a reset when you travel overseas, but surely crossing into a neighboring country can’t have such big credit ramifications, right? Wrong, as Andrew Stephenson, director of product marketing for New Air Appliances (@NewAirUSA) learned.

“In Canada, I had a good credit rating—having owned two properties, credit cards, etc and was pretty much debt free (other than a mortgage),” Stephenson told us. “I had 40 years of credit history in Canada. The company I worked for moved me to the US and my credit score went to zero. Amazingly, two countries that are physically connected and do so much business together you think would share credit info. But alas, no.

“I had to start over, to the point of having my company co-sign on a credit card for me because I couldn’t get approved. This also applied to trying to get a cell phone as well—T-Mobile is one of the only US carriers that will do a Canadian credit check. Three years later in the US, I have an excellent credit score and recently bought a house in Orange County, CA.”

And you definitely don’t want to make any moving decisions too hastily. Because credit changes can’t always easily be undone.

You can’t go home again. Well, you can, but it’ll screw up your score again.

Just because you move back to your original country doesn’t mean your credit will automatically go back to what it was. As Taylor explained:

“However, things don’t usually work out so well in the other direction. Being away from a country with a refined credit scoring system can be problematic when you return. If faced with an application for something that needs several years of addresses, many systems won’t cope with an overseas address, meaning it can take years to build a credit score back up. A gap of several years takes automated systems ‘off script,’ which can leave people who’ve been out of the country for a while unable to access relatively simple things, such as car finance and cellphone contracts.”

Moving countries is a big decision, and it’s one that has a big effect on your credit score. If your credit is already bad, moving can give you something of a clean slate. But it should probably only be one factor among many in such a huge life decision. If you’re thinking of moving abroad solely to escape bad credit, we can assure you there are simpler solutions.

To learn about how you can fix your credit score, check out these related posts and articles from OppLoans:

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Contributors

Nick Brennan is the Founder & CEO of MyUKSIMCard.com (@UKSimCard) which offers prepaid SIM Cards with data, minutes and texts for Americans heading to the UK and Europe.
A 20-year industry expert in Consumer and Digital Marketing, Andrew Stephenson moved from Toronto, Canada to Orange County, California for work in 2015 to build a digital innovation center for his previous agency. Currently, as Director of Product Marketing for New Air Appliances (@NewAirUSA), Andrew and his team oversee the planning and execution for new product launches through a mix of content marketing, online advertising and influencer marketing that connects with consumers along the path to purchase. 
Ben Taylor is a former expat in Portugal who now lives in the UK. I discuss my experiences of life overseas at MovingToPortugal.org and provide advice to freelancers at Home Working Club (@homeworkingclub).

The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.