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Credit Where It’s Due… Please?

| Filed under: Travel | 7 Comments

A letter from the bank landed on my doormat this week offering yet another increase to my credit card limit. This was the third such letter in as many months and it made me reflect on how much my situation has changed since I left England eight years ago.
Credit is a funny thing. When you don’t want it, the banks can’t help but send you endless offers for more but when you need it the most, there’s often none to be found.

Those first few months living as an expat eight years ago were tough financially. In the UK, I had a good job and salary, numerous credit cards, a sizeable mortgage, a car purchased through a bank loan, and an unchequered credit history. All that would be forgotten as I landed in this new country and my past was scrubbed clean. I was effectively a new identity, with no record of daily life here and no financial history to speak of.

Photo credit: Flickr Creative Commons Andres Rueda

I had set up a local bank account but that was it. I had no credit cards, no established relationship with my bank, and certainly no creditable reputation upon which anybody would choose to lend money to me. I had even taken steps to request my entire credit history from the UK authorities as demonstration of my credit worthiness but this would prove irrelevant. My unblemished credit track record was worthless and I had to start building a history all over again. I was a ‘credit ghost’.

But why would the issue of credit matter so much in those early months? Plain and simply, establishing credit was a critical component for my financial security. For example, without a credit history, I was not able to have my electricity, water or telephone turned on in my new home unless I was prepared to pay a hefty deposit. I was not able to secure a mobile phone contract, not able to arrange a car loan so I could get from A to B, and not able to secure a mortgage for my dream house.


I found this extremely frustrating as I had committed to this place, dotted the i’s and crossed all the t’s in the way the authorities had asked me to, yet I felt that I still hadn’t been truly accepted or was being trusted. So much in the modern world relies on the use of credit and existing without it was no mean feat. I was an unknown quantity yet I needed finances to build my new life. I did not have vast quantities of Sterling to bring with me and found myself living hand to mouth with the money I had traveled with. Those early days were not smooth sailing.



And the outcome? I chipped away at the banks and other financial institutions over time in an attempt to build a credit history. Day by day and month by month, I made every effort to tie myself financially to the country I now lived in. My wages flowed into a basic bank account, I avoided going ‘into the red’ which would blemish any track record, I requested an overdraft facility from the bank which would eventually be given, and I paid my utility bills by cheque each month in the hope that I was becoming associated with timely payments and low risk.



Photo credit: WIN-Initiative / Alamy

I would also regularly apply to those generic credit card offers that come through the door. One bank in particular would send out credit card offers on a frequent basis and would eventually approve an application, offering me a ridiculously low limit of $250. Over time, this card would become the backbone of my financial security as the card limit increases crept up to a more useful level.

 
The moral of this story is that it pays to be patient – but also to prepare.
It pays to set up a bank account in your chosen destination in advance of moving there. The simple act of moving money into that account several months before arrival will generate a transaction record with your bank, the beginnings of a relationship, and ultimately an offer of credit down the line.  
Furthermore, upon arrival, the bank or credit card companies may offer a credit card based on the funds sat in your new account. For instance, if you have $10,000 in the bank, then the bank would in all likelihood offer you a credit card with a $10,000 limit. But do not take my word for it. These are my experiences and these things change so often.
At the end of the day, do the research and be prepared. It may suit you to rely on the credit cards from your home country until your overseas credit comes online but you will need to keep back some money in that country in order to pay the monthly bill.
Having no financial history and no credit for those first 6 to 12 months in my adopted country was a major hardship during my early expat life. Only now, eight years later and two countries on, do I look back and reflect on those testing times, wondering how I got by with my $250 credit card.


I got by because I had to, because I had no choice, and because it was part and parcel of this grand expat adventure. And, anyway, who said expat living was supposed to be easy?

Have you got any interesting credit-related ‘war’ stories to share? 
Did you ever find yourself in a situation where the banks wouldn’t trust you and you only had the use of a dwindling supply of hard cash to get by with?

This appeared in The Telegraph’s Finance section on 4 May 2011 – http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/8488177/Credit-where-its-due…-please.html

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About Russell Ward

I am a writer and expat who isn’t afraid of exploring both the good and bad that comes with seeking out a different way of life. I am the author of The Life Less Ordinary Manifesto and I regularly send out an email newsletter with free tips for living your own remarkable life.

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  1. [email protected] says

    Good article that highlights something I hadn’t even thought about. By the time I became an expat a couple years ago, I was able to keep my own 2 credit cards from the US. I use them sparingly (if needed when I travel back, occasionally ordering something that someone brings over, etc.). It’s good to know that I maintain that credit history on my own. (My credit card here is joint.) I can definitely see new expats still having to struggle to establish themselves in a new country.

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  2. Russell V J Ward says

    @linda – I also wouldn’t have thought about this issue until I experienced it for myself. Bit of a tricky one because not everyone ‘believes’ in credit. However, when it’s such an intrinsic part of daily life and you really need that helping hand when abroad, it’s tough going to have such a useful avenue blocked until you have the relevant history… but we made it through!

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  3. TreenaG says

    I had the same problems moving to Ottawa in 2000. Paying for a tiny line of credit and slowly increasing the credit card limits. Most frustratingly I was using a global bank that I had been with since becoming a ‘Griffin’ saver as a 7-yr old. I think this bank may now actually offer truly global accounts, but I suspect they come at a premium.
    The hassle of becoming financially established has certainly made me think twice about repeating the adventure – so kudos to you for going from CAN to AUS. Happy travels!

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  4. Russell V J Ward says

    @TreenaG – Thanks for your comments. I’ve heard stories before about global banks not truly being ‘global’ in that the credit history and relationship doesn’t really transfer over to a new country. Perhaps they do now come at a premium?

    In moving to Australia, the credit issues were ‘slightly’ less as my wife, being Australian, was already established here; however, it simply meant I had to rely on her creditability and had none of my own. I think it took two years before the banks were willing to trust me with a mortgage – timing played a part in that Australia’s economy was booming and banks were overly willing to lend money out.

    Hope to see you here again 🙂

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  5. [email protected] says

    Accurate perspective on obtaining credit as an expat. I am a financial services executive and have dealt with the expat and international community for over a decade, so I am very familiar with these issues and providing solutions. Now I am writing a book on financial services to help expats and anyone leading a global lifestyle – http://www.global-money-matters.com – feel free to sign up for the blog.

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  7. How To Reduce Your Mortgage says

    @global-money-matters -Hey it’s so nice I really want to appreciate to this site. It’s so much interesting matter I like your work. Please carry on with your work and post me such a wonderful article.

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