Does My Credit Score Follow Me Around The World?
Canadians are known for their love of travel, and often spending an extended period of time as an expat in any number of places around the world.
There are hundreds of things to consider when moving abroad. Where are you going to live in your new home? How are you going to get around? What are you going to do for work? How will my bad credit car loan in Ottawa be affected? How much is it all going to cost? Another thing that many people might be wondering is how their credit score at home will affect them internationally.
So does your credit score follow you around the world?
Not many people know the answer to this rather important question, so we broke it down in our guide below. Read on to find out whether your credit score in one country translates to a new one!
Credit Scores Don’t Have Passports
The first thing you need to know is that credit scores don’t jump on the plane with you when you move overseas.
Every country will have different laws and regulations surrounding credit reporting, what is measured, and what must be disclosed to credit providers. This makes translating credit scores from one country to the next almost impossible, as what is measured and how heavily they are weighted won’t be the same. If these aren’t the same, then the credit scoring model used in one country will be vastly different to one used in another.
This situation is a double edged sword for many consumers. On the one hand, if you have bad credit, this means that you can start with a fresh slate in your new home. When you might have only qualified for a bad credit car loan in Ottawa, you have the opportunity to build a fantastic credit score in the new country and qualify for the best loans available.
Conversely, if you had a great score in your home country, all of that hard work to build and maintain that score won’t follow you to the next country. Hopefully, if you have been able to achieve an excellent credit score at home, you will be able to use those skills in the new country to build up another great score in no time.
Credit Scores Don’t Disappear
Now that you know your score doesn’t come with you to the airport, you should also understand that they don’t just disappear either.
It might be tempting to think that once you arrive in your new home, with a fresh slate and no credit history, your old credit score will simply vanish too. However, this is certainly not the case, and you will continue to have a credit score in your home country no matter what. Again, this can be both a good and bad thing depending on your credit situation. If you have struggled with bad credit, then it will still be waiting for you when you get back. On the other hand, if you have a great score, you can still expect to come back to a decent score later on.
Unless you are expecting to permanently move to your new destination, you will likely still want to maintain a few financial ties to your home country. Things like maintaining your old phone number so it’s there waiting for you to return, servicing any bad credit car loans in Ottawa, or managing tax obligations, will all still involve your credit score. Thus, it is important to be aware that once you have a credit file, it sticks with you for life in whichever country it is initiated and will be waiting for you once you return.
Debt Can Stop Your International Move
Just because your credit score doesn’t translate across countries, doesn’t mean past mistakes can’t hamper your plans to move overseas.
Many countries require an extensive visa application process for Canadians. These applications usually involve medical information, legal background, and often, an investigation into the applicant’s financial status. While it is unlikely that the process would involve an actual credit score check, it is entirely possible that the prospective country requests disclosure on outstanding debts in the applicant’s home country. This has the potential to influence their decision, as if they see a large amount of outstanding debt, they may infer that the applicant is bad at managing their finances and will continue to do so in the new country.
This means that simply jumping ship and moving to a new country to escape debts in your home country is usually not a viable option for many people. Unless you are moving to a country that is visa free for Canadians, you will likely need to answer some difficult questions regarding your debts and your application will likely be denied. It is recommended you get on top of your debts at home before you consider moving elsewhere, to ensure you do not go through often expensive visa applications just to be denied.
Maintain Your Score While You’re Away
As your credit score in your home country continues to exist once you move away, you should also take steps to maintain it.
Credit scores are living, breathing numbers that are constantly in flux month to month. When you are at home, you can remain relatively aware of these changes and make fixes accordingly, as you are using your credit accounts often on a daily basis and know how much you are spending and when your repayments are due by. Once you move overseas, you are likely not using your old credit accounts as much, and it is very easy to fall behind on payments or let your score stagnate too long.
Recent credit enquiries and payment history play a huge role in determining your credit score. Even if you have no outstanding debts and thus do not need to make any more repayments, you’ll want to keep an eye on your score. The longer between entries on your credit file the lower your score will tend to drop, as the credit bureaus see the score as less and less indicative of your current financial situation.
It is a good idea to move your cell phone number to a long term credit plan so you can keep it for when you return, as well as maintain a credit relationship. If you have any relatives back in your home country, you could even ask that they use your credit card on occasion to purchase things and then send you the money. This will keep your payment history current and protect your credit score from any significant drops.
Build Your Credit Score In Your New Home
Now that you are in your new home, it’s time to start building up a new credit score to help open some financial doors for you.
Generally speaking, all of the credit building tips and tricks you learnt back home will be applicable in some way in your new home. While language, culture, and laws are often vastly different between countries, the basic foundations of consumer finance remain relatively unchanged, and so improving in any of the categories you are used to back home will likely help you improve your score in the new country. Common methods for building a new credit score from scratch include:
Get A Secured Credit Card
A secured credit card is a type of credit card offered by many financial institutions that gives people with no established credit history an opportunity to get a credit card. These accounts function just like any other credit card, except that you give the bank the money when opening the account. This makes the loan “secured” in the eyes of the bank, as they already have your money. This account will appear on your credit file the same way an unsecured credit card would, and as long as you make regular, on time repayments, your score should improve in no time.
Take Out A Car Loan
Much the same as in Canada, your credit score in many other countries will be influenced by the types of credit you take out and your payment history. Just like with your bad credit car loan in Ottawa, taking out a car loan in your new home can help you diversify your credit accounts and give you an opportunity to make regular, on time repayments. A car loan will also help you get out on the road and explore your new home, giving you a sense of freedom and independence in an otherwise potentially daunting situation.
Open Utility & Cell Phone Accounts
Already a basic essential of moving anywhere, having utility and cell phone accounts in your name can help establish your credit history and begin to raise your score. Utility and cell phone companies tend to place less emphasis on credit scores as they are essential services. This means even with a limited established credit history, most people shouldn’t struggle to get approved for an account and begin to make solid gains in their credit score straight away.
Stay On Top Of Your Payments
Once you have opened a couple of credit accounts, the best thing you can do is ensure you are always making your repayments regularly and on time. No matter where you are in the world, your payment history is going to be the single largest contributor to your credit score. Set reminders for yourself, or auto deposits, or whatever it takes to make sure you are sending money where it needs to go every billing cycle. If you don’t miss a single payment and are on time with everything, you’ll be surprised how fast your credit score grows in a short period of time!
If you are planning on moving to a new country in the next few years but still need to save money and improve your credit score at home, a car loan can be a great way to give your score a boost. Ottawa Bad Credit Car Loans specialises in getting bad credit car loans approved with the lowest possible interest rates. We only negotiate with Canada’s largest banks and don’t take “No” for an answer. We even deliver your new car anywhere you want in Ontario, completely for free. Contact us today and find out what we can do for you!