Moving abroad is an exciting adventure, but it comes with a lot of planning, and one crucial, often overlooked, aspect is your credit score. Many people assume their credit score just moves with them, but that’s a common misconception. Let’s break down what actually happens to your credit when you relocate to a new country.
Your Credit Score Doesn’t Travel Across Borders
No, your credit score from your home country doesn’t magically transfer to your new one. Every country has its own unique credit rating systems, agencies, and scoring models. For instance, India uses bureaus like CIBIL, Experian, Equifax, and CRIF High Mark, while the US relies on models like FICO or VantageScore from agencies like TransUnion, Experian, and Equifax.
This means that even if a credit bureau operates in both your home and new country, your credit history from one won’t be considered by lenders in the other. In most cases, you’ll be treated as a newcomer with no credit history in your new country, meaning you’ll have to build your credit from scratch. You’ll need to open a local bank account, apply for local credit cards, and consistently make on-time payments to establish your new credit profile.
Does Your Home Country’s Credit Score Still Matter?
Absolutely! Just because you move doesn’t mean your credit score in your home country vanishes. Any existing loans or credit card bills will continue to impact your score there. If you miss EMI payments or other bill due dates while living abroad, your home country’s credit score will suffer.
It’s wise not to take your existing credit score for granted. Maintaining a good credit score back home is crucial, especially if you ever plan to return. To ensure your score isn’t negatively impacted, try to keep some financial activity going and always pay your bills on time. Even keeping just one credit card open and using it occasionally can help keep your credit active.
Building Credit in Your New Country
To establish credit in your new country, start by getting a credit card or a small personal loan. Make sure to make all your payments on time. This consistent, responsible behavior will gradually help you build a healthy credit score.
Ultimately, whether you’re moving for education, a job, or any other reason, it’s a good strategy to plan on maintaining a decent credit score in both your home country and your new country for long-term financial security.