# Building credit as an Expat in the EU?



## swim014

I have perfect credit in the US, but this won't do anything for a permanent move to the EU. How can I start building credit in the EU as fast as possible? Should I take out a car loan for a car I can pay for in cash? There would be some interest, but if it builds my credit it may be worth it. Should I take out a credit card in the EU? I have a couple US cards but that won't help in the EU.

I intend to move to the EU permanently. 

Thanks


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## Bevdeforges

In the EU there is no central credit reporting agency like there is in the US. In France, you build a credit record/history with your bank. And there are specific regulations that limit how much you can borrow, based on what you earn and what your other "fixed costs" (primarily housing) are. "Credit cards" in much of Europe are actually debit cards and are usually tied to a specific bank account, with no option to roll over open balances to the next month or further.


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## Befuddled

Credit here is not a "way of life" as in the US or UK. Much more tightly controlled and used sparingly.


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## BackinFrance

Really the only way to 'build credit' in France is by demonstrating regular secure income via your French bank, and even thenlan/credit repayments should not exceed one third of that income. Spending via credit cards will likely have a negative impact on your credit worthiness here because it would be considered that you have an expensive lifestyle, possibly putting at risk your ability to meet your financial commitments.


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## Chrissippus

The OP doesn't need a credit history in France as long as he maintains his US credit cards. I retired abroad eleven years ago and still maintain about four US credit cards. I make sure there are charges on each card every month and pay the balances promptly every month. The result is that I charge most local expenses like groceries to the US cards. Occasionally the issuer checks to see if a charge is fraudulent, but that always gets resolved quickly.


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## Bevdeforges

That approach will maintain your US credit record - but that doesn't count for much of anything here in France. Plus, using your US cards here in France only means that you're probably paying fairly hefty "foreign transaction" and/or exchange rate fees. As Befuddled said, credit isn't a "way of life" here like it is in the US and UK.


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## jweihl

While it doesn't ultimately "build your credit" you should definitely open a bank account in whichever EU country you are looking to relocate. Some countries are moving fairly quickly away from cash transaction, and France is solidly in the middle of that. Life here is so much easier if you have a local bank card (contactless) and a IBAN (international bank account number). They account for the majority of my financial transactions these days.


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## Chrissippus

Bevdeforges said:


> That approach will maintain your US credit record - but that doesn't count for much of anything here in France. Plus, using your US cards here in France only means that you're probably paying fairly hefty "foreign transaction" and/or exchange rate fees. As Befuddled said, credit isn't a "way of life" here like it is in the US and UK.


My US cards have reimbursement rates of 1.5% to 2% which covers the exchange rate cost. None of my cards has a foreign transaction fee, except for Amex, which I only use for US charges.

It's important to maintain a credit rating in the US against the possibility of returning there one day. From the discussion here credit card usage within France isn't a very important basis for credit-worthiness and may even have a negative effect. All that seems to make a good case for maintaining your US credit rating while hiding your credit card use from the French.


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## jweihl

I don't dispute that it's important to maintain a good credit rating in the US, "just in case." We've always had excellent credit ratings, and having monitored them for the 10 months since we moved (because of Equifax data breach, we get access to all their credit monitoring tools for a couple of years) it's stayed pretty much the same even with significantly reduced US based financial activity. Most of our spending (rent, groceries, european travel, insurance, clothing, household expenses) is done from our French bank account so doesn't affect the credit score one way or the other. We do maintain a couple of US credit cards and use them for our ongoing US based expenses (apple, storage unit rent, air travel, digital subscriptions) though those are pretty insubstantial compared to how they used to be. Still, our credit score has hardly changed.


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## Chrissippus

jweihl said:


> I don't dispute that it's important to maintain a good credit rating in the US, "just in case." We've always had excellent credit ratings, and having monitored them for the 10 months since we moved (because of Equifax data breach, we get access to all their credit monitoring tools for a couple of years) it's stayed pretty much the same even with significantly reduced US based financial activity. Most of our spending (rent, groceries, european travel, insurance, clothing, household expenses) is done from our French bank account so doesn't affect the credit score one way or the other. We do maintain a couple of US credit cards and use them for our ongoing US based expenses (apple, storage unit rent, air travel, digital subscriptions) though those are pretty insubstantial compared to how they used to be. Still, our credit score has hardly changed.


And you need US bank accounts to pay your US credit card bills and federal income tax, for instance. A US bank is the best way to receive US payments, such as Social Security. Most banks and virtually all brokerages will close or freeze your account if they get wind that you have moved abroad, so be sure to have enough banks. sdfcu.org is an excellent credit union that will open an account for a US citizen expat. 

We do all of our spending, except for rent, on US credit cards without any problems. The VISA and MasterCard networks get the best exchange rates, because of the scale of their transactions. Here in Thailand credit cards from local banks have no statutory fraud protection, so that's a non-starter for us. European credit cards don't have that problem, but there is no disadvantage to using US credit cards, especially if you have US-sourced income.


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## Bevdeforges

If you are travelling regularly back to the US, it is indeed useful to have a US credit card (or two) to rely on. But as more and more US banks become "nervous" about non-resident customers, you may eventually decide to sever your bank ties with the US (or simply to cut them back significantly). There are work arounds (including, but not limited to services like Wise or Revolut) and, at least in France, don't turn up your nose at the Federal Benefits Unit at the Paris consulate. They often get your US SS benefits into your account more quickly than the US SS office does/can and the exchange rate they get is generally excellent.


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## Chrissippus

Bevdeforges said:


> If you are travelling regularly back to the US, it is indeed useful to have a US credit card (or two) to rely on. But as more and more US banks become "nervous" about non-resident customers, you may eventually decide to sever your bank ties with the US (or simply to cut them back significantly). There are work arounds (including, but not limited to services like Wise or Revolut) and, at least in France, don't turn up your nose at the Federal Benefits Unit at the Paris consulate. They often get your US SS benefits into your account more quickly than the US SS office does/can and the exchange rate they get is generally excellent.


That's not my experience. I do not travel regularly to the US nor do I currently intend ever to live there again. But my assets do live entirely in the USA.

I chose my banks for their willingness to serve the expat community. First, USAA Federal Savings Bank markets to military and former military, which includes a lot of overseas retirees. I have no military background myself, but at the time I opened the account it was possible to qualify by joining a military affinity group. That option is no longer available, but they have not closed my account even after demanding that I provide my physical address, which I did. About five years ago I needed another bank, so I joined State Department Federal Credit Union which is the only US bank/cu of which I am aware that will open an account for a US citizen expat. My wife and I both have accounts there now. SDFCU is now my preferred bank, but I use both banks every month.

So, I expect to use both banks for sometime to come. After the next 9/11 incident and an even stricter Patriot Act, that could all change, but for the moment it is quite workable.

The brokerages are a different story. You cannot let them get wind that you have expatted or they will close or freeze your account. There is US broker, Interactive Brokers, that will open an account for a US expat, but they are otherwise not very attractive. I won't open an account at IB unless I really need to.

For a retiree with a chunk of his assets in a TIRA or Roth IRA, brokerage services are essential. So, it behooves us to keep the lowest possible profile. The best strategy is to open up US bank accounts, brokerage accounts, and credit card accounts in abundance before moving out of the US after which it will be difficult or impossible to do so.


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## jweihl

I agree with Chrissipus, you can find US financial institutions that are familiar/comfortable with dealing with overseas living. We too have USAA, and they have always been good at customer service and used to members living abroad. My wife and I both attended Michigan State University which has a huge foreign student contingent (they were really aggressively courting Chinese students until recently), so our MSU Credit Union is also quite supportive of our living abroad. They're printing cheques with our french address on them ... not that we'll use very many of them. And it is super convenient that I can set up regular FREE transfers to my Wise account. I hope I never have to change.


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