Moving abroad is the adventure of a lifetime. While you’re definitely going to have your hands full planning your trip, it’s also important to prepare for when you eventually move back to the United States. Protecting your credit score while abroad should be one of your financial goals because otherwise, you’ll be starting over from scratch when you get back. If you are working to build your credit, or if you have maintained excellent credit over the years, you know that it time and effort to make it happen. Fortunately, it doesn’t take much work to maintain a credit score abroad.
1. Use an American credit card while abroad
If you already have an American credit card, the easiest way to maintain a credit score abroad is to just keep your account open. As long as you use your card at least once or twice every year, the account will stay open. This little bit of activity is enough to keep your credit history going and will also build up your credit score.
Now, most credit cards charge a foreign transaction fee when you make purchases outside of the United States. This usually adds an extra 3 percent charge to your purchases. If your card charges this fee, you probably only want to make one or two purchases a year, the minimum to maintain your credit score abroad. Otherwise, the extra fees will start to add up.
Another option is to apply for a credit card that waives foreign transaction fees. You can use these cards anywhere in the World without having to deal with this extra charge. This might be your best option to have a credit card while abroad, especially if you haven’t had a chance to build credit in your new country. We cover the best cards with no foreign transaction fees so you can find the best option for your travels.
2. Keep an American bank account and mailing address
To keep your American credit card active, you’re also going to need an American bank account and mailing address. You’ll need the American bank account so you can pay off your credit card purchases. You’ll also need a mailing address for the credit card company to send you your account statements and anything else related to your account. Keep in mind that credit card companies won’t accept a PO Box for your mailing address. If you won’t have a residential address in the States while you’re living abroad, ask a family member or close friend if you can send your mail to them. That way you won’t risk losing your account while you’re outside of the country.
3. Open an American Express credit card
If you’re living abroad and no longer have an American credit card, you should try opening an American Express account. American Express looks at credit information around the world when it makes decisions on approving new cards. You can use an American Express credit card while abroad and start building decent credit history by making your monthly payments on time.
When you eventually return to the United States, this history will help your chances of qualifying for an American Express account in the United States that you can use to rebuild your credit score. This only works with American Express. Other credit card companies only look at your domestic credit history so anything you do with a credit card from another country won’t help you qualify for an account in the United States.
4. Open a secured or joint credit card as a last resort
Hopefully, you can find a way to maintain your credit score while abroad but sometimes that just isn’t possible. In this case, when you come back to the United States it’s going to take some work to rebuild your credit. Since you won’t have any credit history, it’s going to be tougher for you to qualify for a credit card. You might have to open a secured or joint credit card to get started. A secured credit card has a credit limit that is backed up by a cash deposit. You have to make this deposit before you can open a secured card.
A joint credit card is an account that you open with another person who has a more established credit history, like a friend or family member. They’ll be backing up your credit card with their credit score so it’s very important that you make all your payments on-time. Otherwise, it will hurt both your credit scores. Either type of account will build your credit history. After consistently making timely payments, you should be able to qualify for a regular credit card.
You worked hard to build up your credit history. Don’t let all this work go to waste. Make sure to keep this advice in mind so you can maintain your credit score abroad so that you’ll come home in great financial shape.