A comprehensive guide to help US expats rebuild credit history

June 8, 2021

When you’ve been living abroad, moving home can feel just as complicated as when you first left for your new country. You may need to find another place to live, figure out transportation and deal with the emotional impacts of returning home (some people refer to this as reverse culture shock). But you’ve got this, because you’ve done this before.

Another important task is to plan for how you will rebuild your credit history so you can get approved for a mortgage or a vehicle loan and apply for a credit card with good terms. Your credit history in the US doesn’t follow you around the world, but luckily, there are plenty of steps you can take to make the credit rebuilding process as painless as possible.

But first, what happens to your credit when you move abroad?

When you stop using credit in the US, it’s as if your credit history gets placed on a shelf. Gathering dust, your credit history dwindles the longer you live abroad because activity on your credit reports is only visible for seven to ten years. (Unfortunately, this doesn’t mean that outstanding debts will simply disappear – you’ll still have to pay those.)

Of course, any open credit accounts that are in good standing may remain on your credit reports indefinitely. But it’s also possible that if there’s no activity on open credit accounts, the credit card company may close the account without your knowledge.

However, with the right actions, you’ll soon be on your way to rebuilding a great credit score.

So what can you do to rebuild your credit history?

No matter what, it’s going to take some time to rebuild credit history when you return home. But not to worry. Here are four steps you can take to start rebuilding your credit history today.

1. Check your credit report

Checking your credit report is one of the most important steps you can take because it reveals how much work you’ll need to put in to improve your score. Your reports will also reveal where you currently stand in the eyes of new lenders.

In the US, there are three credit bureaus that collect data to build credit reports. These credit bureaus are TransUnion, Experian, and Equifax. You may notice that your credit reports differ between the three credit bureaus. Small differences are normal because lenders may only report to one of the three bureaus. Big differences are not normal and may require further investigation on your part.

You can check all three of your credit reports for free once a year by visiting www.AnnualCreditReport.com. Because of the pandemic, each credit bureau is offering free weekly reports until further notice, so you can check your credit reports more often to track your progress. If you’ve accidentally damaged your credit score, it’s better to find out about it sooner rather than later. Then you can rectify the mistake and avoid repeating it.

2. Open a US bank account

If you closed your US bank accounts before moving, you should re-establish a relationship with a US bank or credit union when you return. Once you’ve established a relationship with a bank, they may be more willing to extend credit to you. Many banks offer their own credit cards or personal lines of credit attached to checking accounts, which can help you build credit history.

(To learn more about what type of bank account might be best for you, see our previous post about bank accounts.)

You’ll need a US address to open a bank account, so you might consider using a friend or family member’s address to start the process early. Many banks run a credit check for new customers, so you might have difficulty completing this initial step. If you do, we recommend returning to the bank you held accounts with before you moved abroad. They may have positive records of your customer history they can use to reopen your accounts.

3. Apply for a US credit card if you don’t already have one

If you have an open credit account in the US, you can start making small purchases on that card while you’re still living abroad. You’ll probably need a US bank account to pay off the balance, but making small purchases now can go a long way toward re-establishing your credit history.

If you don’t have an open credit card, consider applying for one as soon as you get back to the US. Again, this may be difficult without sufficient credit history. Receiving rejections from credit card companies is frustrating, but remember to space out your applications.

Applying for too many credit accounts at once looks bad to potential lenders, so trying to get approved for one card after another can actually do more harm than good. Remember to take it slow and steady – good credit isn’t built overnight.

Once you do get approved, use the credit card moderately. Your credit history is most likely to improve when you use credit consistently in small amounts and when you pay off the balance each month. Experts typically recommend using less than 30% of your credit allowance for the best results.

4. Open a Loqbox

Finally, Loqbox can help by giving you an easy way to build your credit history without having to get a credit card or take out a loan. Our unique approach to credit improvement allows you to build positive credit history while saving your own money, all for free. The money you save will be returned to you at the end.

We’re an especially good tool for returning expats. Although you may get rejected for credit card applications due to limited credit history, we don’t run a credit check. If you can afford to save $20 a month and want to build a positive credit history, learn more about how we work here.

And don’t worry, you’ve got this. Rebuilding your credit may not have been at the top of your list when you decided to move back, but once you start on the credit-building journey, you’ll be amazed at the opportunities available to you.

Loqbox is no longer available in your state. If you're an existing member you can still access Loqbox here.