Your credit score is a vitally important part of your financial life. But what happens if you try to use it in another country? Will it still work, or will you need to start from scratch with a new score?
With the recent rise in international travel, more opportunities for employment are opening up all over the world. But what if you want to move to Australia, will your credit score still be valid?
Does your Australian credit score work overseas?
An Australian credit score does not work in other countries. Credit scores are not internationally transferable because each country has its own credit reporting systems, regulations, and data protection laws. When you move abroad, your Australian credit history and score will not be recognized by foreign lenders or credit bureaus, and you will generally need to start building a new credit profile from scratch in your new country.
Not every country uses a credit scoring system, and of those that do use one, they usually operate independently from other countries scores due largely data protection rules in different nations.
Some countries, like the United States, Canada, and the United Kingdom, have their own credit scoring systems that may look at similar factors as Australia, but the data is not shared between countries. Other countries may use different methods or focus only on negative credit events.
The credit bureaus in the United States are Equifax, TransUnion, and Experian, whereas Australia uses Experian, Equifax, and Illion. While each of the major credit bureaus in the United States calculates a Fico score out of 850 (FICO score), each Australian credit bureau has its own scale: for example, while Experian calculates an Australian credit score out of 1200, Equifax calculates an Australian credit score out of 1000.
It’s good to understand and be in the know about the Australian credit bureaus.
What can you do to build a credit score in other countries?
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.
If you can’t seem to immediately qualify for a low-rate credit card or even a platinum rewards card, don’t fret! Start by trying to build your credit history with a local credit card. Even though the interest rate on this kind of cards is usually high, as long you are careful with your spending and keep up with repayments, you may not be charged interest on your purchases at all!
Get a phone contract If you don’t need your phone for an extended period of time, it might be more practical to purchase one. However, if you want greater freedom to use your phone when and where you choose, a prepaid cellphone is the way to go. You should try to keep up with your payments in order to maintain your score.
What about improving your Australian credit score?
It’s best to have the payments in your own name so that you can improve your Australian credit score. Your gas, electricity, and internet payment history is part of what makes up your credit history, which lenders use to assess whether or not you’re a good candidate for a loan. If you’re occasionally late on payments, having your name on the account could help establish a positive credit history; however , if you’re behind on payments this may have an unfavorable impact.
If you’d like to keep a good credit score, don’t forget the accounts you have back at home. Maintaining even one active account will ensure your credit history doesn’t completely disappear – which could happen if you’re living abroad for an extended period of time. Having no credit history could cause significant delays if you decide to go back home.
A suggestion before moving overseas
Getting an international bank account is one alternative to consider before moving abroad. If you join a bank with numerous branches in several nations, you may be able to set up your finances from the comfort of your own home, making it simpler when you have to relocate. This also makes establishing a local credit history and beginning to improve your credit score much easier.
Bad credit can be a huge obstacle when it comes to obtaining finance. This is because a low credit score indicates that you are a high-risk borrower and lenders are less likely to want to work with you. However, the team at Clear Credit Solutions can help to clean credit history, which will improve your credit score and give you a better chance of being approved for finance. So if you have found yourself in this situation, please don’t hesitate to get in touch with us for assistance.
