How to Build Credit as a U.S. Expat

If you’re a U.S. expat or are on your way to becoming one, you’re probably thinking about everything you need to do to ensure a smooth transition. But have you thought about your credit when you’re overseas?

Many people don’t know how to build credit as U.S. expats. However, when you understand how the credit system works, you’ll be better equipped to maintain a good score in the U.S. while living abroad.

How to build credit as a U.S. expat

If you’re one of the many people hoping to build credit as U.S. expats, these steps may help you get started:

Maintain a United States mailing address

It’s fairly common for banks and credit card companies to require you to maintain an address within the United States to keep your account open. Having a mailing address in the United States when you live abroad can prove to be very helpful.

If you have friends or family members in the United States, you might consider asking them if you can use their address. If you don’t, you might consider using a specialty mail forwarding service.

Keep up with payments

If you have outstanding debts in the United States, keeping up with your payments is essential. Your payment history matters the most when it comes to building and maintaining your credit score. Even a single missed payment can stay on your credit report for seven years.

Keep your accounts active

If you go too long without using your American credit cards, lenders may ultimately shut down your account. To stop that from happening, make a point of using your American cards at least occasionally. 

You should be able to use them to make online purchases. Ideally, use credit cards without foreign transaction fees.

Use a credit builder app

Many United States lenders will not extend credit to you when you’re living abroad. This is where credit builder apps and other online financial services may be able to help. Kikoff is one of those services, and for just a few dollars per month, we can help you build up your credit. Here’s a quick overview of how it works:

• You apply
• We verify your identity with your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN)
• If you’re approved, you gain access to a $750 credit line to use in the Kikoff store
• You gradually pay off the purchase (with no interest!)
• We report your payments to all three credit bureaus

Kikoff also offers premium plans that come with rent reporting and other credit-building tools.

Take out a credit builder loan

Some banks and online lenders have credit builder loans specifically for U.S. expats. Taking out one of these loans may help you improve your U.S. credit while you’re out of the country.

How the U.S. credit system works for expats

If you’re a U.S. citizen, you likely have an extensive credit history. Your past and present credit cards, loans, and other types of credit all appear on your credit report.

When you move to another country, your U.S. credit report is still active. This means that missing payments or otherwise failing to manage your credit could lead to a drop in your score.

If you plan to be out of the United States for a significant period of time, you’ll probably need to start building credit in your current country, too.

How foreign income and residency affect credit

For those looking to build credit as U.S. expats, it’s vital to understand how living abroad and making money abroad can affect credit. Moving abroad doesn’t change your credit score by itself, but it may make it harder to improve your credit score in the United States. 

You probably won’t be able to take out new U.S.-based credit accounts, but you’re still responsible for the outstanding balance on any credit cards, mortgages, or other debts tied to the United States. If you don’t pay your bills on time while living abroad, your credit score could drop precipitously.

Common mistakes to avoid

Want to make it as simple as possible to build credit as an expat? Make sure to avoid these common mistakes:

• Not setting up a U.S. address
• Closing your U.S.-based accounts when you move
• Ignoring all of your credit accounts in the U.S.
• Failing to monitor your U.S. credit report while abroad
• Failing to tell your bank or credit card issuer about the move

If you’re planning an international move and want to be extra sure that your U.S. credit report stays in good shape, talking to a financial advisor may help you come up with a plan.

Conclusion

People who want to build credit as U.S. expats often aren’t sure how to boost their credit scores while living abroad. Kikoff offers you one way to do that. Whether you intend to live abroad long-term or will be heading back to the U.S. in the near future, we’d love to help you build credit responsibly.

Get in touch with us today or open your account now to start stronger credit habits with Kikoff.