Tips for building credit as a digital nomad in 2022

More and more adults decided to jump ship and travel the world. Unlike bankrupt backpackers, digital nomads earn an average of $119,423 per year.

The typical digital nomad is 32 years old and leaves the United States to live and travel to international destinations including Southeast Asia, Europe and the Caribbean.

Spending time as a digital nomad allows a person to continue their career, travel with their family and experience the world. However, most people will eventually end up with this lifestyle.

Once a digital nomad settles in one place, he may face financial problems despite a high income. A lack of credit history makes it difficult to obtain a loan for a home or car.

Most credit analysts and personal financial advisors note that no credit causes negative consequences similar to bad credit. As they travel the world, digital nomads can begin to form a solid financial foundation.

authorized user

An easy way to get credit as a digital nomad involves becoming an authorized user on a credit card owned by a trusted family member or friend. Authorized users receive cards in their own name and have access to the entire credit line.

Anyone considering the authorized user option should choose a partner with a good credit history and stable finances. Your timely payments help the authorized user build a credit history.

Authorized users must clear purchases in advance to maintain a healthy relationship with their family or friends. If the family member or friend fails to make payments on time, it affects the credit history of the digital nomad.

Consider a secure card

People new to credit can start with a secure card. This involves paying a security deposit that acts as a guarantee.

A secure card does not require a co-signer. Secured cards usually have a low credit limit of $1,000 or less.

The banking institution reports payments and uses them to major credit agencies. This helps the cardholder build a credit history and work towards getting a regular credit card.

Secured cards generally have high annual percentage rates of up to 27%. Paying the balance each month avoids hefty fees.

Travel Rewards Credit Card

girl using travel reward card
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Once a digital nomad has a few years of credit history and a good credit rating, choosing a travel rewards credit card offers additional perks. These cards offer discounts and points for hotel stays, flights, travel insurance and more.

American Express offers the Platinum Card® Travel Rewards Card. People with good to excellent credit scores benefit from their points program and other bonuses related to domestic and international travel.

The Chase Sapphire Preferred® Card charges an annual fee of $95 as of 2022, but also provides plenty of points for travel-related spending. The Chase Sapphire Preferred® card does not incur foreign currency exchange fees, making it ideal for digital nomads involved in international travel.

Here is a complete list of credit card recommendations for digital nomads

Apply for a loan

A small personal loan also helps to build credit. Lenders report payments to credit bureaus.

For example, Care Credit for dental and health services helps establish a credit history. A credit-building loan for fixed payments, such as jewelry or fancy travel gear, offers another option for digital nomads looking to get credit.

keep good credit

When traveling, access to email and the internet makes it easy to pay bills online. Digital nomads planning to spend time in areas without reliable internet should consider automating their payments.

Keep credit usage low

The amount of credit in use plays a big role in a person’s credit score. Using less than 30% helps maintain a good to excellent credit rating.

Request a credit limit reduction

Instead of closing a rarely used account with a long history, a digital nomad could ask the lender to lower his credit limit. Another option involves asking the creditor to change the card type to a no-fee credit card.

Keeping the account open and not using it or using only a small amount of available funds and paying the balance monthly maintains healthy credit and prevents high inactivity fees.

Traveling the world doesn’t stop you from settling down at some point in the future. Building a credit history makes the process easier and offers useful perks for traveling.

In addition to responsibly using these credit tools, digital nomads will also need to take some other steps to build and maintain their credit history. One of the most important steps to take is to obtain a credit report from each of the major agencies once a year.

By law, the three major credit reporting agencies must provide every American adult with a free copy of their credit report. The release of these reports every four months provides important information about credit history and scores.

At some point, the nomadic lifestyle comes to an end. With an established credit history and timely payments, former nomads can enjoy a comfortable and financially secure lifestyle.

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