When you decide to move abroad from the U.S. you will need to set yourself up financially in a new country and one of the challenges is establishing good credit when moving abroad.  You need to establish a new credit record in your new home country but should not neglect maintaining your credit score in the U.S.

You may have heard that U.S. credit scores are not relevant in other countries, and that’s true to some extent. U.S. credit scores are not accepted in other countries because they have their own credit rating system to determine a borrower’s creditworthiness. Additionally, authorities and lenders in other countries typically can’t view your U.S. credit score due to privacy protection laws. These aren’t hard and fast rules that apply to every country, but for the most part, this is the case.

While this might sound like great news if you have a poor credit standing and a lot of debt, it doesn’t mean you’re going to get a clean getaway from your financial obligations. This guide will help you understand the importance of establishing good credit when moving abroad and how your current credit is going to affect your new life.

Why Does My Credit Score Matter If I’m Not in the U.S.?

1. Your current credit score matters because it will be examined before you move.

When you decide to go on an extended stay or move to another country, you have to apply for a visa. During the visa approval process, your current debt situation will be examined to ensure you’re not trying to run out on your financial obligations.

Generally, you want to have a credit score over 670, which is considered “good” according to Equifax.

2. You’ll likely need credit cards to facilitate your move—it’s often very expensive to relocate—and you may need to use your U.S. credit cards while abroad.

Whether you need to maintain certain expenses in the states (a storage rental, car payment, etc.) or just want to have a card in case of emergencies, you’re probably going to keep your U.S. credit card accounts open—especially if you expect to come back eventually. If you want to keep using that line of credit, you’ll need to maintain a good credit score.

3. If you plan to return to the U.S. eventually, even for a few months, you’ll likely need to have a good credit score to rent a car, lease an apartment, and more.

For many expats, there are times in their lives that they need to return to the U.S., whether it’s for a month or even a year or longer. Whatever the case may be, you might need to rely on your credit score to help you accomplish something.

4. You may be able to use proof of a good U.S. credit score in your favor while trying to qualify for lending abroad.

Some countries, like Canada for instance, may be willing to take your U.S. credit history into account when considering lending to you. It can’t hurt to ask, so just make sure you have a recent copy of your credit report to provide in case they allow it.

Landlord credit checks are also commonly used to vet renters, which will provide information on your credit history, prior evictions, and identity information.

Tips for Maintaining Good Credit

So, how do you go about maintaining your credit score once you’ve left the U.S.?

• Keep making your payments on time if you have a balance. It can be easy to get distracted by all moving parts when you relocate, but don’t let your debt obligations fall off your radar.
• Use your credit card from time to time to make sure your account isn’t closed. Some companies will close unused credit cards after as little as three months of inactivity.
• If you continue to use your U.S. credit cards abroad, try to pay off the balance at the end of each month.
• Make sure your accounts are secure and you have fraud alerts on. Cyber threats and the potential for getting pick-pocketed are both concerns when it comes to protecting your credit score.
• Switch to electronic notices or have your mail forwarded to a relative’s house.

If you’re going to keep using your U.S. credit cards abroad, make sure you have one that doesn’t have foreign transaction fees. Otherwise, you’re going to be spending a lot of extra money unnecessarily. According to Investopedia, the standard transaction fee is between 1% and 3% of the transaction value—that can add up quickly.

How to Establish New Credit in a Foreign Country

While you maintain your U.S. credit score, you also need to start establishing new credit. Establishing good credit in your new country of residence is essential because, just like in the U.S., you will likely need it to rent a living space, rent a car, and other essential tasks. Even some jobs require credit checks if you’re going to be handling money or financial information.

So, how do you build credit when you’re starting your life in a new country? Here are some tips for getting the ball rolling:

• Research the credit system in the new country before moving. Having an understanding of what to expect once you get there will make it easier to facilitate the process of establishing credit as quickly as possible.
• Secure proof of address as soon as possible. In order to open a bank account or receive any type of lending, you’ll need to show proof of residence in the country. This usually requires a utility bill or something similar registered in your name for a local address.
• Set up a bank account once you have the necessary information. Make sure you also bring your passport for identification.

Now you’re ready to apply for a credit card. In many cases, this can be difficult without existing credit history in the country. However, there are some major credit card providers who offer options for expats to help with this exact issue. For example, the American Express Global Card Transfer Program enables expats to apply for an American Express card in a new country, using their previous AMEX credit history in the U.S.

Before you make the move, look into similar credit programs as well as the top credit cards in the country. Once you are able to establish some credit history, keep building on it via other methods, such as buying a car. Having a good rental history (by making on-time payments and avoiding evictions), you can continue to improve your creditworthiness in your country of residence.

Set Yourself Up for Success

Building credit is an important step in getting established in a new country. Having good credit will help you to fully integrate into the way of life and lead the life you want there. Don’t get discouraged just because there are challenges to overcome when establishing credit in a new country. It will take time, but it’s worthwhile to follow the process, it’ll make life in your new home so much easier in the long run. Happy moving!