Will my debts still hurt my credit score if I move abroad?

  • Will my debts still hurt my credit score if I move abroad?
22 May, 2023
Daniel Cohen
11 min
1958
what happens to unpaid credit card debt if you move abroad

Debts in one country don’t affect your credit score in another country

Each country has their own way of calculating a credit score.

Have you gotten a job offer in another country? Do you want to get a taste of life elsewhere? Are you moving to another country for any other reason? Whatever the circumstances, it’s common for expatriates to wonder about debts they will soon leave behind and the effects it will have on their credit score.

The effect of your debts on your credit score if you move abroad

As an example, let’s assume a U.S. citizen has accrued debts but recently moved to Australia.

Simply put, failing to clear their debts when they move abroad will continue to hurt their credit scores in the U.S. However, their debts will not hurt their credit score in the new country. 

If an individual moves from the U.S. to Australia without paying off their debts, their credit score in the U.S. will continue to drop, but their credit score in Australia will not suffer. 

In fact, in a new country, they will be starting from square one.

While debts and credit history do not go beyond the borders of their individual’s original country, they remain active. This means that if they return to the U.S., those debts will still be active and their credit score will probably be in ruins. This is strongly dependent on the length of their stay abroad.

Why your debts won’t damage your credit score in a new country

Your debts will not negatively impact your credit score in a new country if you relocate.

Varying credit scoring and rating systems

The first reason why your pending debt won’t hurt your credit score in your new country is because countries calculate credit scores differently. Additionally, the credit companies that deal with consumers’ data and monitor their credit history differ from country to country.

Since the systems used to compute credit score and creditworthiness vary, one will not affect  the other. Additionally, the regulatory entities involved differ from country to country, so there is no unified database.

Relevant data protection laws

Data protection laws typically prohibit credit organizations from revealing consumers’ data to foreign entities. Thus, there’s a huge communication barrier between credit organizations across the globe. 

Since such sensitive information is withheld, information cannot be transferred from one jurisdiction to another. Your score and creditworthiness won’t automatically apply as a result.

Although debts will not affect one’s credit score in a new country, they will still affect their score in their original country. The best solution is to pay debts off before moving abroad to avoid any issues.

If you have any further questions concerning your credit score, contact us.

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About the author
Daniel Cohen
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Daniel Cohen is a Founding Partner of Consumer Attorneys and a co-chair of Consumer Finance Litigation practice. Since 2017, he is a member of the National Association of Consumer Advocates and the National Consumer Law Center. Mr. Cohen is a nationally-recognized practitioner of consumer protection law. He has a wealth of proven legal experience in the US in: collective claims, representing visually impaired people who believe their rights under the Americans with Disabilities Act have been violated in both the physical and digital environments, corporate governance and dispute resolution. Read more

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