Here’s the section that nobody tells you about. When you go on an international assignment, unless you have a global bank account, you start over from scratch with zero credit. None, nada, zip. This means that you can’t get a cell phone contract, a car loan or a mortgage without jumping through some serious hoops.
Now, even if you move on a short term assignment, this can have quite serious implications. You will almost certainly be spending time in a hotel when you first relocate, and hotels require a credit, not debit, card for security. Yes, you can use the one issued by your home country bank, but every time anything is charged to the card, you pay not only a foreign exchange fee, but also a poor exchange rate. The same rule applies every time you withdraw cash, pay for coffee, or fill up the rental car – which also requires a credit card for security purposes. The additional charges add up really, really quickly.
Getting a cell phone will demand a hefty deposit, often as much as $800 ( I know this, because that’s how much I was charged, and yes, it did hurt). Buying a car in cash is not as easy as it sounds (you will have to pay bank fees and exchange rates) but even if you manage it, your insurance premiums will also be affected by your lack of credit history. and so it goes on.
So what can you do to minimize the impact?
In the US? Get a Social Security number. If you are not intending to earn an income, you will often be told that you don’t need a Social Security number. Sadly for you, the SS number is the main form of identification used for financial transactions, and not having one can make life very, very difficult. The last four digits of your number are often used for account access, so if the person at the bank/insurance company/cell phone store uses an override code, your chances of using the online or telephone account management systems are non-existent. Again, I know from experience..
Have evidence of your home country credit history. Although it won’t have much impac on your ability to get a cell phone, many banks, credit unions and financial institutions are able to do an international or manual credit report, and can use this to approve and improve your rates on larger loans. Not only does it save you money, but it also starts to establish a host country credit history.
Get a low / no international fee credit card. Many banks are now offering credit cards which have either a low or no fee use abroad, so with a little planning, you can open one before you move. Terms and conditions vary hugely between card issuers, so read the fine print carefully and ensure that it meets your needs, and that it allows to you be out of the country for the required period of time.
Consider opening a global bank account. HSBC, Barclays and increasing numbers of other banks are offering global accounts, which allow you to be paid in one currency (and location) and use funds in another. They usually require either a significant income stream or a large investment portfolio, but some employers offer assistance as part of their relocation package, so it’s worth asking.
Open a secured credit card in your host country. These cards require you to put a security deposit down, usually of the same amount as the card limit. Your payment history and details are reported to the credit bureaus in the same way as a credit card, so you do establish history, and provided you manage your account well, you can apply for limit increases. These are not ideal, but they do allow you access to a credit card and the associated benefits, but they do have very high interest rates, so good management is crucial.