The importance of building a credit history in a foreign country
International students need good credit for loans, rentals, and financial stability. Learn how to build credit with smart strategies, student credit cards, and Prodigy Finance loans.
Moving to a foreign country for education or work is an exciting opportunity, but it also comes with financial responsibilities. One crucial aspect that international students often overlook is building a credit history. Establishing a strong credit score is essential for future financial opportunities, such as renting an apartment, securing a car loan, or obtaining better interest rates on education loans.
This guide explores the importance of building credit history abroad, its impact on financial stability, and the best strategies for international students to achieve a good credit score.
Why is credit history important?
A credit history is a record of how responsibly you manage borrowed money. It helps lenders assess the risk of lending to an individual. A strong credit score benefits international students in multiple ways:
Easier approval for rental agreements
Access to better loan options with lower interest rates
Eligibility for credit cards and student loans
Improved chances of job applications
Ability to purchase assets such as a car or home in the future
Students with a limited credit history may struggle to secure student loans at traditional banks.
How to build a credit history in a foreign country
International students and expatriates often start with no credit history. Here are some effective ways to build a strong credit profile:
1. Open a local bank account
A bank account is the first step towards financial independence in a foreign country. It helps in:
Managing finances efficiently
Establishing a relationship with a local bank
Gaining access to student-friendly credit cards
2. Apply for a student credit card
Many banks offer student credit cards that help build credit without requiring a high credit score. To use it wisely:
Start with a low credit limit
Pay the full balance every month to avoid interest charges
Never miss payments to avoid late fees and penalty records
3. Use an education loan to establish credit
Taking out an education loan is one of the best ways to start building credit. Loans from Prodigy Finance help international students fund their studies while simultaneously establishing a credit record.
Benefits of Prodigy Finance Loans:
Flexible loan options – with or without a co-signer – Available for students from multiple countries.
Competitive interest rates* – Lower than traditional banks
Flexible repayment terms – Adjust payments based on future earnings
Reports to credit bureaus – Helps build a strong credit score over time
4. Pay bills on time
Your utility bills, rent, and phone payments can impact your credit score if reported to credit agencies. Paying on time demonstrates financial responsibility to lenders.
5. Avoid high credit utilisation
Using too much of your available credit can harm your score. Keep your credit utilisation ratio below 30% for a good credit standing.
Common mistakes to avoid
While building a credit history, international students should avoid these mistakes:
Missing payments – Late payments negatively impact credit scores
Applying for too many credit cards – Each application results in a hard inquiry, which can lower your score
Ignoring loan payments – Loans from Prodigy Finance and other lenders must be paid on time
Closing old accounts too soon – A longer credit history improves scores
Education loan options for international students
Securing a study abroad loan can help fund education and build a credit history. Here are some common education loan options:
1. Prodigy Finance education loans
Available for students from 150+ countries
Both with or without co-signer loans are available, giving you flexible options.
Flexible repayment options
Helps build a positive credit score
2. Government and private bank loans
Always require a cosigner (usually a parent or a close relative)
May require collateral
Lower interest rates but limited to specific countries
3. Scholarships and grants
Scholarships reduce the financial burden of studying, making it easier to manage living expenses without relying on credit.
How long does it take to build credit?
Building a strong credit score takes time. Here’s a general timeline:
0-6 months: Start using a credit card responsibly and make timely payments
6-12 months: Apply for small loans or increase your credit limit
1-2 years: Establish a good credit score with consistent financial habits
Final thoughts
A good credit score is essential for international students planning a long-term stay in a foreign country. By using credit responsibly, applying for an education loan from Prodigy Finance, and following smart financial habits, students can secure a stable financial future.
Apply for a study abroad loan with Prodigy Finance today!*
Prodigy Finance Ltd is authorised and regulated by the Financial Conduct Authority in the United Kingdom
*Loan and promotion offers are subject to our eligibility, funding, and credit assessment criteria. Loan amounts are subject to the cost of attendance limits set by schools. Representative APR 13.16% variable. APR includes interest + mandatory fees (All-inclusive rate of borrowing).
