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The Hidden Compliances in Global Mobility

The Credit Challenge

How local credit requirements impact foreigners

What happens when you move to a new country but your credit history stays at home? This is a challenge every Expat faces, but one that can be overcome.

Many people spend their adult life trying to build and maintain great credit, making sure they follow all the credit do’s and don’ts. That’s great, but the minute you move to a new country, you have to start all over. When an Expat moves to the United States, they have no U.S. credit history. Just how bad is that? Well, credit can play a major role in the life of an Expat.

main image The Credit ChallengeIn the USA, whenever you want to make a big purchase (a car, a house…you get the picture) the lender will ask to see your credit score. 90-perecent of all financial institutions use credit as a determinant for the loan. So unless you luck out and find the 10-percent that don’t check, your credit score is pretty important. Your score is tied to your Social Security Number, which they will use to run the query. When they discover you have no local credit history, they are either going to deny the loan, or charge you insane rates which raise the price.

Scary, right? Don’t worry, there is good news. There are special options for Expats to get loans in the United States, and this will help you start building a local credit score. But first things first, it’s important to know how credit works in the USA.

Credit Scores in the United States

FICO is the most common model for credit scoring in the United States. Your FICO credit score is a three-digit number between 300 and 850 that is generated by a mathematical algorithm using information in your credit report. On this scale, 300 is the lowest credit rating and 850 is the highest. Your credit report is designed to predict how risky it is for the lender to give you a loan, and specifically, the likelihood that you may fail on your credit obligations.

Your FICO credit score is made up of five parts:

Building a Credit History in the United States

In order to build a great credit score you need to establish credit, but in order to establish credit you need to build a great credit score – seems complicated, right? It doesn’t have to be. This is where companies specializing in Expat lending can help. Look for companies that specialize in services, such as car leasing and financing, mortgages, insurance, etc…

Companies that deal specifically with Foreign Nationals understand the struggles with credit. They make their lending decision based on attributes such as employment, salary, visa types, and other factors besides a local credit score. The best part is, working with these companies will lay the foundation to start building a United States credit history. The credit history you build with these companies will help establish your credit worthiness for the future.

Maintaining Your New Credit Score

Once you have begun building your credit score it is very, very, very (you get it, right?) important that you maintain it. This will get you better interest rates and lower down payments for future purchases.

Below are a few tips for maintaining good credit:

Follow these tips, and you will be on your way to achieving an excellent credit score, making you any lender’s dream!

By Amy Oberlies, International AutoSource

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