Can I Transfer My Canadian Credit History to the U.S.?
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If you’re in the process of moving to the United States, or anywhere else, you might be wondering if your credit history will be coming with you. Unfortunately, credit information cannot be transferred to another country because there are legal and practical implications. The good news is that you can build credit in the U.S. when you get there, the same goes for most other places. Once you have some credit history under your belt, you can start working towards your financial goals. Let’s explore more of the credit implications when you depart from Canada.
Will My Canadian Credit History Transfer to the U.S.?
The short answer is no, Canadian credit history cannot be transferred into a U.S. credit history. The reason why basically boils down to the fact that credit information cannot be transferred across national boundaries due to legal and practical issues.
First, there are legal implications involved with transferring credit history information across national borders. Credit reporting laws differ from country to country. This means that the existing credit report you have in Canada would not meet the credit reporting requirements of the U.S. and therefore can’t be transferred.
Second, if credit history information could be transferred from Canada to the U.S., it would have to be adjusted to meet the U.S.’ credit reporting laws. The same would go for any credit information transferred between two other countries. It would be extremely challenging and time-consuming to convert historical credit data to meet the U.S. standards which is why it isn’t done. The information within a credit report is drastically different from country to country which is why the transfer of information is so difficult. As an example, some countries report on all the individuals within a household on one report while others have a unique report for each individual.
Third, technological resources used for credit reporting can greatly differ from one country to another. Transfer between two countries simply might not be possible if the systems and software are not compatible.
What’s the Difference Between Canadian Credit and American Credit?
In the U.S., credit bureaus collect and create reports using your credit information. This information is submitted by lenders, credit card companies, banks, and other institutions that you have a financial relationship with. These lenders are not required to submit information, but they choose to. Using the collected data, the credit bureaus will create a credit report and calculate your actual score. Whenever you apply for financing, potential lenders will pull your credit report to aid their decision-making process.
The above is fairly similar to how Canadian credit reports and scores are generated. What is different is U.S. credit reports contain both positive and negative information. In addition, your immigration status will not be reflected in your credit report so that bias is not possible. Lastly, there are three credit bureaus in the U.S., but only two credit bureaus in Canada. The three credit bureaus in the U.S. are TransUnion, Experian, and Equifax.
How to Build Credit History in the U.S.
Even though credit history cannot be transferred from Canada to the U.S., there is an opportunity to build credit from scratch in the U.S. While it’s not ideal to start from scratch, you will likely build credit fast with your experience and knowledge of credit in Canada. Let’s explore how you build credit in the U.S. further below.
Creating a Financial Foundation
To start building credit, obtain an SSN, bank account, and a job in the U.S. A SSN is a Social Security Number which is essentially the American version of a Social Insurance Number (SIN). You will need to go through an application process to obtain an SSN. Opening a bank account will kick start your credit history and having a job will make it easier to start obtaining and using financial products.
Start Building Credit History
Now that you’ve established yourself in the U.S. and have obtained the basics, you can start building a credit history. Since you’re just starting out, using a secured credit card, becoming an authorized user on someone’s account and making sure to pay your rent on time and in full are easy ways to start your credit history.
You might have difficulty obtaining a regular credit card since you have no credit which is why a secured credit card is a good starting point. In addition, being an authorized user on someone else’s account will add to your credit history without you having to do anything. Be sure to ask a friend, family member or someone you trust when becoming an authorized user. If the individual has poor financial habits that will reflect on you. Finally, rent payments are often reported in the U.S., so be sure to pay your rent on time and in full to build healthy credit.
Interested in more information about secured credit cards? Click here.
Establish and Maintain Good Financial Habits
To ensure that you build a healthy credit history, establish and maintain good financial habits. For example, you should always pay your credit card and other debts on time and in full. Also, try not to use more than 30% of your available credit to keep your credit utilization ratio low. If you had a good credit score in Canada, bring the financial habits you use to build it with you to the U.S.
While You Move, Your Credit Stays
Even though you’re moving to the U.S., your credit information and report will stay here. Unfortunately, that means you’ll need to build your credit from scratch in the U.S. The silver lining is you won’t be building credit forever so long as you start building credit as soon as you get there.
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