With international travel starting to warm up again, more options to migrate for the sake of your career are becoming available. So, if you're coming to Australia and have an American credit score, does it work in Australia? What about in Europe? Does your credit score come with you on your travels?
The short answer is: No.
Your credit score is not recognised worldwide. Not every country in the world uses a credit score system, and those that do typically operate their credit rating systems independently, without communicating with different countries. This is often due to information protection laws in different countries.
Of course, this does NOT mean you can get out debts simply by skipping the country! It may be more difficult for lenders to track you down overseas, but it won’t stop them from trying, and if you ever return home, the law may be waiting for you.
There are often similarities between credit scoring systems around the world, though the differences are also significant. For example, the credit bureaus in the USA are Experian, Equifax and TransUnion, while in Australia we have Experian, Equifax and illion. And while each most credit bureaus in the US collect data to calculate a credit score out of 850 (the FICO score), each credit bureau in Australia uses a different scale – for example, Equifax calculates an Australian credit score out of 1200, while Experian’s Australian credit scores are out of 1000.
What can I do to build a local credit score?
Whether you’re an expat travelling to or from Australia, the USA, Canada, the UK, the European Union, Japan, China, India, Brazil, South Africa or other countries that use some form of credit rating system, there are steps you may be able to take to start building your credit score in your new home, and start applying for more premium credit products with confidence. Be sure to check what systems are in place in the local area, as different rules and standards may apply.
Get a credit card
You may not be a be to immediately pick up a super-low rate credit card or a platinum rewards card, but a local credit card may help you start building a credit history. Even if your credit card interest rate is relatively high, if you can spend responsibly and manage your repayments within the car’s interest-free days, you may not always be charged interest on your purchases.
Get a phone contract
Yes, a prepaid phone means more flexibility. But committing to a phone plan lets you start building your financial history with the telco. Try to keep up with your payments to maintain your score.
Put the bills in your name
Your payment history for gas, electricity and internet gets recorded in your credit history, which can be used to build your Australian credit score. Having your name on the bill can let you start building the credit history necessary to get a good credit score, though if you run behind on your payments this could have a negative effect.
Consider an international bank account
Joining a bank that operates in multiple countries may allow you to set up your finances from home, so that they’re ready to use when you move overseas. This can make it easier to get started establishing a local credit history and building a local credit score.
Don’t forget about your credit score at home
If you plan on returning to your country of origin, you may want to maintain an account or two there in order to keep a modest credit history. This will help to keep your credit history from disappearing altogether, which could leave you back at square one with no credit score if you return home after several years.