How Does Moving Abroad Impact Your Credit Score?

An opportunity to move abroad should cause much excitement. Perhaps you are temporarily relocating for higher studies or have received a stint at an international branch of your company. However, amidst the excitement, you can’t help but wonder what will happen to the hard-earned credit score you have painstakingly built through the years. Will it be transferable to your international account? Can it be used as proof of your reliability to secure a flat abroad? Or does it add up to nothing?

Worse still, you may be wondering whether you can finally escape your pile of credit card bills by moving abroad. Be warned: that is not an advisable option. Read on to find out what happens to your credit score when you move abroad.

What Is A Credit Score?

Your credit score is a number that reflects your credit history. In other words, it shows whether you have been a responsible borrower who is eligible for taking out loans. It is calculated based on several factors, including repayment history, credit utilisation, credit mix, and length of credit history.

A good credit score not only makes it easier for you to secure loans but it is also an overall indicator of your financial responsibility. Landlords need it to verify potential tenants, lenders for loan approval, and immigration offices for visa grants. There are four RBI-licensed credit bureaus in our country that calculate credit scores: CIBIL TransUnion, CRIF High Mark, Equifax, and Experian, each with a slightly different calculation mechanism.

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How Does Moving Abroad Affect Your Credit Score?

When you move to a different country, you will no longer be able to use your credit score tagged to a credit card back home. This is mainly because different countries use different data protection laws, and agencies will hold information that relates to addresses in that particular country.

Your credit card and credit score will still exist. You will simply not be able to use it to gain financial legitimacy in a foreign country. This essentially means starting from scratch in a foreign country and building your way up using a credit card from an institution in said country. However, this is not all bad news. Considering you will still return to your home country someday, it’s important to keep your credit card active and continue to build your score for the future. Keep these things in mind while doing so:

Keep at least one credit card account open and use it to make EMI payments. Enabling autopay reminders will ensure your account is regularly used. Overseas accounts often charge extra fees to make such payments, so you might as well use your home cards. Consider using the OneScore app to set up reminders for bill payments and EMIs.

Make occasional purchases on your card, even if it’s just 1-2 payments a year. This is adequate to maintain your credit record and will allow you to have a longer credit history, which automatically improves your credit score.

If you must close your accounts, do so over a period of time. Closing them off suddenly will cause a steep drop in your credit score, which might be difficult to recover.

Inform your home credit bureaus that you have moved to a different country. This will rule out suspicions of identity theft when you use your credit card from another country.

Cards that remain unused for long have greater chances of identity theft. This is more reason to use your credit card from time to time and monitor your credit score periodically. Check out your credit score and credit report on the go with the OneScore app.

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If you have any outstanding debts, you must pay them off before you leave the country. This is of the utmost importance. Defaulting on loans can have serious consequences. Once you return to your home country, you can be disqualified from ever taking a loan. Moreover, your assets in your country could be seized, and your creditor could sue you for non-payment of dues.

In conclusion, moving abroad can have various effects on your credit score, both in your home country and abroad. While your credit score in your home country might not be directly impacted immediately, managing your accounts responsibly and building a new credit history in your new country is essential. By staying informed and adopting good financial habits, you can successfully navigate the complexities of international credit management and maintain your financial health wherever you go.