How International Debt Can Affect Your Credit In Canada

If you’ve ever lived abroad, you’ve had to open bank accounts and forms of credit in other countries. You might have opened a mobile or internet account, or you could have had utilities in your name. What happens if you default on bills, tickets or credit in other countries, and then come back to Canada? Does your debt follow you? Will it affect your credit report? This blog will go over how international debt can affect your credit in Canada.

Handling international debt can be tricky, and there are different factors to consider.

1. How Much Do You Owe?

A small debt may not be worth the cost of pursuing repayment internationally. Usually, debtors have to hire Candian lawyers and go through the Canadian legal system in order to come after you. The cost of such procedures can be quite high, and it might exceed the amount you owe.

2. How Motivated Are Your Debtors?

If the debt you owe is important enough to your lender, they may take on the expense in order to collect.

3. Do Your Debtors Have Business In Canada?

If the lender you owe money to has offices in Canada, they could have Canadian lawyers on payroll which makes it easier for them to follow through.

An unpaid debt in another country is going to show up on your credit report in that country. Debts in those other countries will not directly report to Canadian credit bureaus, but there are several ways they can still affect your credit in Canada:

1. If the debtor pursues recognition of a foreign legal judgment against you in the province you now live. This legal judgment, if granted recognition by your provincial government, can show up on your credit report.
2. If your potential lenders, employers or landlords in Canada choose to get your credit report from other countries in which you’ve lived, they will see the debts you owe beyond our borders.

Your credit history from another country can also come back to haunt you if you ever decide to go back.

In short, while it's costly for lenders to pursue your debts internationally, it's still possible that they will choose to do so.
Your credit score is not immune to any international debt either, so your best course of action is to pay off anything you owe, even if it's across the border.

Have you ever had to deal with debts across borders? How did that work out? Let us know in the comments!