Exploring foreign education? Make a 'creditable' history

Studying abroad can be daunting, financially. It can turn out to be an expensive affair. What's more, arrival in a foreign land poses new challenges for students. These could be in the form of regulations, to which adjustments have to be made.

For instance, you need a credit record for everything abroad. It is checked when you go to rent an apartment or apply for a mobile connection. A good record can help strike better deals. This is especially important for a student who plans to stay after course completion.

Many would think having his/her bank's branch abroad would solve some of the problems. But, no. If you have an account with, say, Standard Chartered, it does not mean the foreign branch will consider or access your Indian credit record. You need to build a fresh record while abroad. This can take six to eight months.

Bank and related transaction: Opening an account is still not a tough task, as most universities have tie-ups and yours could provide you all documents and address proof. And, once you start operating the account, your record starts getting built, based on transactions via the debit card and net baking. Through these, you could build a favourable credit past.

Depending on the type of transactions and account balance, students can apply for credit card(s). However, exercise caution, else you'll land yourself in a debt trap.

Abhishek Sadekar, studying at Syracuse University, US, recalls how a friend got a credit card with a limit of $400 and no interest for the first six months. He could pay the minimum amount of $20. The friend used the card liberally and ended paying hefty interest later. Obviously, this impacted his credit history, affecting his future borrowings.

Accommodation: Vinayak Kamath of GB Education, a Mumbai-based consultancy, says, "Most universities have limited on-campus accommodation. Plus, it is quite expensive as compared to off-campus ones (sharing basis)." But, renting an apartment requires good credit record and/or guarantors (friends/relatives there with good credit pasts).

Mansi Ghalsasi, 25, a student of Monash Melbourne University, Australia, says, "As international students, we did not have a pre-existing credit history. Neither did we have relations who could stand in as guarantors." Three of her friends and she had to pay an extra A$300 or Rs 15,000 per month.

According to Karan Gupta, an education consultant, "The ideal solution here is paying three-six months rent in advance or a security deposit." Which means Ghalsasi would have to pay A$1,500-3,000 or Rs 75,000-1.5 lakh upfront.

Phone contracts: Credit histories can get marred by basic mistakes, as Gaurang Nabar, a student of Architectural Association's College of Architecture in London found out. In the UK, one gets a mobile phone contract (post-paid connection) only after a compulsory credit check. International students can't get one immediately. They must use pre-paid connections.

Unfortunately for Nabar, who did not submit sufficient documents to establish his residency in London, the post-paid connection was discontinued. Two months later, he was contacted by a collecting agent for a pending payment of £60. "I had instructed my bank to stop direct debits to the service provider. Hence, the delay. My credit history suffered and I am unable to get a phone contract," he rues.

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