Should U.S. Expats get credit in a foreign country?

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This is probably the number question people used to ask me when I was a banker and when I lived in China. In the U.S. credit makes the world go round, not money. If you are living in a foreign country, ask yourself this questions before you go out and try to get a credit card, mortgage, or loan.

  1. Do you need more debt? What is your current debt level in your home country? Do you plan on being in the foreign country long enough that you will need credit?
  2. Do you understand the language and local credit rules and regulations well enough to apply for credit and handle any issues or problems you may have? What are the rules, if any, around consumer protection?
  3. What are your options for repayment? (i.e. balance in full each month, a finance charge for not paying in full each month, and what is the interest rate on the finance charge? Is it variable or fixed?), are there other fees associated with credit usage? what are the acceptable payment sources (cash, credit card to credit card, including international credit cards, checking or savings account), and payment channels (mobile and online only, in person only at selected vendors?).
  4. What are the ramifications for not paying your debt? (i.e. your assignment ends, you are fired from your job, or you have an emergency at home and have to the leave the country suddenly). In some countries, you can be thrown in jail for not paying your debts. Is non-payment of debts reported to your employer? and will it affect your current and future immigration status?
  5. Is a credit file automatically created for you? If so, what information does it contain, how long will it last, what can you do to remove errors and have it updated? Will a credit file be kept on you even when you move out of the country and do not have an address in that country? Is this credit report confidential or shared with other companies and agencies in the country?

 

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