How To Protect Your Credit Score While Living Abroad

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On February 10, 2015
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Photo by Sean MacEntee

When you’re living in Japan, you still need to protect your credit score back home. If you lose or damage your credit history while in Japan, it’s going to create problems when you go back. For example, you might struggle to qualify for a mortgage or car loan. Fortunately, it only takes a little bit of work to maintain your credit score while abroad.

Keep your old credit cards active

A big part of your credit score is the length of your credit history. Lenders prefer to see years of history where you’ve consistently made your credit card payments on-time. That’s why you should keep your old credit cards open when you’re living in Japan even if you don’t use them that often. If you shut down your cards while you’re abroad, you’ll be starting over from scratch when you go back home. Any history you built up before you left will be lost.

You don’t have to use your cards often to keep them active. If you make one or two small purchases a year and pay them off right away, you’ll be doing enough to keep your accounts open while building up good credit history.

Track and pay bills online

The internet makes it extremely easy to maintain your credit card while living abroad. Most credit card companies give you online access to check on your account so you can keep track of your purchases and see when payment is due every month. You can also pay your bills online by transferring money from an online bank account. That way you won’t have to worry about mailing checks from Japan.

American Express transfers information between different countries so building credit with this card in Japan will help you when you go back home.

Have a friend or family member collect your statements

While you’re living abroad, you should change the mailing address for your credit card bills so they go to a family member or friend who is still living at home. This way you’ll have someone who can keep an eye on the paperwork in case something important comes up. Also, credit card companies require that you have a domestic mailing address on your account and usually won’t accept a PO Box.

Rebuild with American Express or a secured credit card

If this information is coming to you too late and you’ve already shut down your credit cards, don’t worry. You’ll be able to recover. It’ll just take a little more work. If you can qualify for a credit card in Japan, one option is to open an account with American Express. American Express transfers information between different countries so building credit with this card in Japan will help you when you go back home.

If this isn’t an option, you might not be able to qualify for a regular credit card or loan when you return home. You might need to open up a secured credit card instead. This is a credit card where you need to make a deposit to back up the line of credit. This card still builds your credit history though and can be your way to rebuild so you can get back to normal.

You worked hard to build up credit so don’t let this work go to waste. With a little planning, you can maintain your credit while you’re in Japan so you can return home in good financial shape.

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Skier, traveler, tax strategist.
  • Barnaby Jones says:

    I agree that schools should do a lot more to teach kids how to handle money. Apparently this differs greatly per country!

    In the Netherlands a bank looks especially at how many years you’ve had a steady income to see if you are to be trusted with a loan or mortgage.

    I don’t really understand how you don’t pay interest on borrowed money 🙂 Credit isn’t free…. is it?

  • Barnaby Jones says:

    Urm… what’s a credit score? I try not to use credit cards, since you’re essentially borrowing money (and paying interest). Isn’t it better to just pay stuff from, you know, a paying account? (A debit account that has money on it… 🙂

    • Anthony Joh says:

      You pay no interest if you pay off your credit cards in time. This is a smart way of building up a good credit score. Which is important for many things such as trying to get a loan, rent an apartment, finance a car, etc.

  • Stephanie says:

    Good advice here! also worth noting that many Canadian (and, I assume, American) banks do paperless banking so my bills and credit statements are all available online. I use my credit card quite a lot here and use GoRemit to transfer a lump sum once per month to pay it off. Works well.

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