We recently received a very good question from a foreign
exchange student who is moving out of the country. He asked
if the credit established in the U.S follows a person, in
this case to Canada. Here is what we found through our
research.
SSN vs. SIN
In the United States, individuals are identified by their
social security number (SSN). There is no other person in
the United States with an identical SSN. In Canada, people
have social insurance numbers (SIN), which serves the same
purpose. Credit bureaus in Canada use the SIN to keep track
of individual's credit reports. Since the U.S and Canada
are two different countries, SSN's cannot be tracked in the
Canadian systems and SIN's cannot be tracked in the U.S
systems.
Credit Bureaus
In the United States, there are three major credit bureaus:
Experian, TransUnion and Equifax. These three bureaus
provide credit reports and scores for all individuals with
a social security number who have opened a line of credit
or a loan. Canada's credit bureaus follow the same
procedures.
In Canada, the three major credit bureaus are Equifax
Canada, TransUnion Canada and Northern Credit Bureaus,
Inc.. In several scenarios, people have found that the
United States TransUnion and the Canada TransUnion share
the same data in their systems. In result, there may be a
possibility of a Canadian financial institution pulling
your U.S credit history. This could be good for people with
positive credit and bad for those with not so good credit.
Equifax may do the same and share their data between
countries. We have found that Experian has no effect in
foreign credit because it only conducts reports on U.S
residents. The same applies for Northern Credit Bureaus and
its Canadian residents.
Credit Scores
As far as credit scores go, TransUnion Canada and Equifax
Canada have both implemented the FICO system from the
United States. The only difference being is credit scores
in Canada range between a score of 300 and 900. Scores in
the United States use a scale of 300-850.
Scores closer to 900 are a lower risk for the lenders,
which could mean a lower interest rate to the borrower. The
opposite can be said for scores closer to 300. These scores
would be a much higher risk for the lender and in result
would mean a higher interest rate for the borrower.
If I do not have an SIN and am a American citizen, how do I
apply for credit if I move to Canada?
Just like in the U.S, in Canada it is hard to obtain credit
without a credit history. You can walk inside a Canadian
bank and explain your situation to them. Some banks in
Canada will ask for some information from your U.S credit
report. This will enable them to make an easier and quicker
decision to issue credit. Some may offer you a secured
credit card which will help you build a credit history by
depositing a certain amount on a pre-paid credit card and
then make payments.
Also, as stated above, TransUnion may have the ability to
display U.S credit report information to Canadian financial
institutions because of shared data between TransUnion
Canada and the United States TransUnion.
What if I want to move to Canada for an extended period of
time and then move back to the United States?
If you are not planning on being a long term resident or
are not planning on buying a home, it may be best to stick
with United States based international credit cards. Credit
card companies with affiliates in the U.S and Canada would
work best. These cards will work in both countries but
will only report to the U.S credit bureaus.
Here is an excerpt from the U.S Department of State: "If
you will be abroad for an extended period, you may want to
arrange for the delivery of your mail. Some banks and
international credit card companies handle mail for
customers at their overseas branches. In addition, post
offices in many countries will hold mail for travelers
under their General Delivery (Poste Restante) services.
U.S. Embassies and Consulates do not handle private mail.
Check with the embassy of your destination country to see
if that will be possible there. A listing of foreign
embassies and consulates in the U.S. is available at
http://www.state.gov/s/cpr/rls/dpl/32122.htm. "
A safe bet is that if you owe on a debt in the U.S and move
out of the country, you will owe on that debt upon your
return, as it will be recorded on your credit report. Will
creditors try to collect from you in another country? Well
that is the golden question. The golden response is, they
may have a right to collect. Will that new country consider
your U.S credit history? It may.
Regardless of where you move, it is best to maintain a
positive credit history. If your new country of residence
chooses to look at your U.S credit history you want to make
sure it is clear of negative information. However, one
cannot assume that a positive U.S credit history will help
establish new credit in another country.
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Debt Management Credit Counseling Corp. ("DMCC") is a
501c(3) not-for-profit charitable organization located in
Deerfield Beach, Florida. DMCC provides free financial
educational materials, brochures, seminars and a financial
literacy program titled Debt, Money & Credit Concepts ? to
consumers across the United States. DMCC also provides free
assistance to any consumer needing a solution to their
debt problems, including personal budgeting, debt repayment
plans, credit restoration, student loan consolidation and
mortgages. DMCC financial counselors can be reached by
calling 866-285-0994, emailing debthelp@dmcconline.org, or
by visiting http://www.dmcccorp.org .
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