Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com.
Dear To Her Credit,
I have accumulated debt on my credit card and recently quit my job. Now I am looking to quit the UK. What impact will this have on my credit rating, if at all? Will the UK bank try to seek the money elsewhere from me?
What are the implications, for me (internationally) in my native country? I am not usually one to not pay off my debts, but was in a very difficult position and now am not earning nearly enough to make minimum payments, let alone clear the debt. -- Lillian
Dear Lillian,
I wouldn't bank on being able to just move away from your money troubles.
"It would be difficult, but not impossible to start afresh by just moving away," says Wesley K. Young, legislative director, The Association of Settlement Companies (TASC) and general counsel, Debt Settlement America. "It is difficult in this day and age to get away from your debts because the banks so easily share information internationally." As banking becomes more automated and interconnected, your creditors' chances of finding you will only get better over time.
You have a better chance of leaving your credit score behind when you move. Surprisingly, credit scores are not international -- at least not yet. Andy Jolls, CEO of Videocreditscore.com, a credit scoring educational site, says, "Banks in the UK do not report to U.S. bureaus in most cases. But the real question is whether the debts are reported to a collection agency that crosses international waters."
The only way you can know for sure if your credit score followed you is to pull your credit report when you get back to your home country. Jolls says, "My short answer is that her debts may not follow her. While that might seem like good news, the bad news is that she will have to start all over to build credit.'
Barry Paperno, consumer operations manager of FICO score developer Fair Isaac Corp., agrees. "Our experience at Fair Isaac indicates that credit bureau information does not tend to cross borders -- even within the same international credit bureau. After making such a move, your FICO score will be based solely on your credit history at the credit bureau in your new location and is not likely to include any of your credit history acquired in other countries previously."
Even if you can start afresh on your credit score and your debts never catch up to you, I don't recommend simply moving away from your problems. You don't want to spend the rest of your life wondering if or when those debts will come back to haunt you.
After you move, find a financial counselor if you need one and look at all your options. As soon as possible, make a plan to start paying down your debts. You may be able to negotiate a lower settlement, especially if a large part of your balance is from fees and interest charges. If all else fails, even bankruptcy -- a move I almost never recommend -- might be better than leaving debts in limbo forever.
If you were not moving, you would find a way to work this out; you can find a solution once you get settled. Financial problems are never hopeless.
Good luck with your move. I wish you the best in your new life!
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: December 26, 2008
Three most recent To Her Credit stories:
Should one spouse take on full debt load? – A married couple with joint card debt wants to transfer the balance to a lower rate card. Should the better credit score spouse take on the burden alone? ...
Can you use dad's credit card when he's ill? – An adult child is taking care of her dying father and wonders about the legality of using his plastic to pay for bills and medical expenses ...
Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!
