Why No Global Credit Score?

Credit card and crumpled bill Image

When I was a banker, I heard this all the time from my international clients, most of them Expats and Immigrants coming to the U.S., as well as U.S. Expats moving overseas.

Why No global credit score? More importantly, why doesn’t you credit score travel with you? In the past, there have been several legitimate reasons:

  1. Most countries have stringent consumer privacy data laws that make it difficult. In some countries it is illegal to share an individual’s personal data, including credit history across borders.
  2. Individual countries and cultures use various identifiers (i.e. U.S. social security number, Canadian Social Insurance Number, Hong Kong Identity Number), and evaluate criteria in different ways (e.g. repayment history – in some countries, late and missed payments are considered negative information, but in other countries being a few months late or missing a few payments is acceptable).
  3. There are legal challenges in how companies would access reports, update information, and correct inaccuracies.
  4. A reliance on data from existing local systems with local characteristics specific to certain countries and not meaningful to others (i.e. Race and Ethnicity – most countries now have laws that prohibit this information from being used in the credit decision-making process, but some still may use it. Housing Status – owners are usually considered a lower risk than renters, but, in some countries, like Canada, mortgage payments are not reported to credit bureaus. Data reporting – Some nations only report negative data to credit bureaus, but in other countries, it’s mandatory for lenders to provide positive and negative data.
  5. Each country has its own standards for calculating a credit score. As a result, there has not been an agreed-upon method to create a global credit score.
  6. There is not a centralized way to collect, house, and share information.

There are 2 Fintech startups addressing the credit challenges for foreign nationals in the U.S. Modernlend is focused on getting international citizens credit cards. Nova Credit is helping immigrants use data from their home country.

How have you solved your credit needs in a foreign country?

 

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