What happens to your credit score when you move abroad?

Moving abroad, whether it's for education, a major job change or any other reason, is an exciting step for a person. With new opportunities and experiences, moving countries brings many new changes and things one should be careful about, like lifestyle changes and how expensive that country is. One of the important financial considerations that you should consider, which is often overlooked as well, is a person’s credit score.

Many assume that when you move to another country, your credit score goes with you. However, this is false. Credit scores don’t travel across borders. But this doesn’t mean that your credit score in the current country shouldn't matter to you anymore. Let’s understand this in detail. 

Can credit scores be carried to another country?

No, when you move to another country, your original credit score does not go with you. Every country has different credit rating systems, credit rate-determining agencies and scoring models. For instance, in India, four credit bureaus (Reserve Bank of India-licensed) provide credit scores: Experian, CIBIL, Equifax and CRIF High Mark. In the US, FICO or VantageScore models are used by agencies like TransUnion, Experian and Equifax for reporting credit scores. 

So, if you move to the US from India, or any other country, your old (original) credit score won’t be transferred or considered by lenders there, even if the credit bureau/agency is the same in both countries. In most cases, you will have to build a credit history and score from the start in the new country.

In many countries, you will be considered a newcomer without any credit history by lenders and banks, which means that you will have to establish credit in your new country. You will need to open a bank account, apply for a local credit card and make payments on time to build credit. International lenders, usually, can’t access your Indian credit report even if they use the same credit agency, so even if you have a decent credit score in India, it will not help you qualify for loans abroad. 

Does this mean your Indian credit score doesn’t matter anymore?

Not necessarily. If you move abroad, your CIBIL score, or any other Indian credit score, will remain active. Just because you move countries doesn’t mean that your credit score will be erased. This means that any loans or credit card bills that you currently have will continue to impact your credit score. If you miss EMIs for your loans or any other bill payments while you’re abroad, your Indian credit score will suffer. 

Further, even if you’re moving abroad, it’s advised not to take your Indian credit score for granted. It’s important to maintain a consistent credit score, in case you need to move back to your home country. To ensure that your credit score doesn’t get impacted, maintain some activity and pay your bills on time. Even if you don’t live in India anymore, keep at least one of your credit cards open and use it occasionally to keep it active.

If you wish to build credit in a new country, start by taking a credit card or a small personal loan. Make timely payments and build a healthy credit score gradually. If you’re moving abroad, plan to maintain a decent credit score in both your home country and the new country to be secure in the long run.