Access to financial services when living abroad as an expat
November 29, 2021
Access to financial services when living abroad as an expat

Cristina Fuertes

Being an expat means preparing and researching for lots of changes once you relocate. Access to financial services when living abroad as an expat

You’ve probably done your research on the best places to live, which neighbourhoods you should avoid or the most popular traditions. Access to financial services when living abroad as an expat

As for banking issues, most people don’t worry or research about them…until they can’t access their money or they see the costs of managing their own money grow exponentially.

It is quite usual that you only think about having a strategy on banking issues the moment you try to withdraw some money from an ATM, or you receive money from abroad and see with dismay that the costs are terribly high, whether through international fees or currency conversion. 

There are different approaches to banking services while you are an expat, let’s recap them: 

  • Keeping your usual bank account (back in your home country). 
  • Opening an international bank account (so that you can manage currency quickly).
  • Opening an online foreign exchange account. You should check, though, if your employer is willing to pay your salary through this kind of account.
  • Opening an offshore bank account. 
  • Opening a local account. Go local, they used to say. It’s one of the best options if you plan to stay for a long period, and if you understand the local language. 

Or you can even consider combining all (or some) of the above to fit your needs. 

Opening an account is one of the easiest financial steps when setting yourself up as an expat in a new country. But there’s another huge issue you need to control: the access to credit. 

Getting access to credit as an expat Access to financial services when living abroad as an expat

Getting access to credit as an expat doesn’t differ a lot from getting yourself eligible for a loan in your country of origin. Access to financial services when living abroad as an expat

Banks and lenders all over the world check your credit history to decide whether you are trustworthy enough to “deserve” their money. 

What is credit history? Access to financial services when living abroad as an expat

Your credit history is a record with all your debts and how they’ve worked out. 

This means all lenders have a clear vision of what your ability to repay debt is (based on what you’ve done in the past). 

Your credit report also has information on your credit cards, loans, mortgages or even debts with your phone or subscription companies (such as Movistar, Netflix or even if you failed to pay the gym subscription).

Depending on the data shown on your credit history, lenders will be more willing to grant you access to credit or not. 

They will also use your credit history to decide on the amount of interest you’ll pay (the more risky you are according to your credit history, the more you will pay).

What does credit history give you access to?

As obvious as it may seem, credit history does not only grant you access to credit, it will also regulate your access to other financial and non financial services. 

And the reason is because some housing, utilities or transport services ask you to have a credit card, or a bank account and a check to your credit history. 

But not only this: if you want to rent an apartment, finance a new bike, a TV or remodel the kitchen, you will need to have credit history.

How does credit history work when you move as an expat?

Now that you know what exactly is credit history, the next question is if it “travels” with you. Do lenders have access to records all over the world? 

The answer is… it depends. 

Lenders find it difficult to access the credit history from all over the world, but if you have a debt and you return home, the debt will still be there regardless of how long you’ve been abroad. 

It will also depend on who you owe money to. Depending on the person or company, they will have more power to reclaim your debts. 

Starting as an expat with no credit history

Ok, so what if you move abroad and have no credit history? In fact, it can also apply to having no credit history in your country of origin. How do you solve that?

While it may seem such a positive sign (you’ve never had to ask lenders for money, so you’re in a strong financial position), it is no such thing for lenders. They want evidence that you can be reliable and use credit responsibly. 

If you want to operate as normal as possible in your new country, you’d better start building your credit score. You can do so by: 

  • Asking for a credit card. Yes, it sounds strange. You can’t access credit, but you’ll gain access to it by… asking for it and returning it wisely. You’ll probably have access to less than you would expect, but it’s a starting point.
  • Be prepared for rejections. You’ll have to ask for a credit card probably more than once, because some lenders will refuse to give you credit. 
  • Once you’ve been rejected, don’t start asking other lenders or banks with insistence. Try to space out your petitions of credit: it can look weird if you ask lots of banks at the same time. 
  • Start consuming with your credit card. Once you have a credit card, you need to start building your credit score. How? By shopping with it, and being always on time when you have to pay for it. 
  • Proving that you’re legally living in the country.

Easy credit as an expat… with Xpats

You now have a global vision of what it means to access credit while being an expat: it’s not easy and it’s not quick. (checkout this article by Citizen path that lays down the exhaustive steps to credit building)

Xpats is your savvy travel buddy: we want you to have the best experience ever as an expat, and we’re working to make your credit score easily accessible from day one with our global credit-score passport. 

Would you like to access all the services and lifestyle you could have with a great credit score across the globe?

Sign up for our priority access and be one of the first members to win it!

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