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How an American Created a French Credit History

A while back I asked how foreigners can create credit in the United States. This is a response. Kelly writes Almost Frugal, a blog on frugality for the rest of us. She is American and has been living in France since 2000. If you liked this post, then why not subscribe to her feed?

I first came to France as an exchange student and as such, had no need of a French bank account. Instead I withdrew whatever cash I needed at an ATM, or paid with my American bank card. At a certain point I decided to get a cellphone, which normally requires a bank account, but my host mother was kind enough to pay my phone bills for me, for which I then gave her money.

In order to obtain my work visa, before I married and before moving, I had to prove a source of income originating from outside of France. This is to make sure that if for some reason I lost my job, I would not become dependent on the French state for welfare.

When I moved to France permanently, to marry my handsome French frog, I needed a bank account in which to deposit my paychecks. I was lucky to have my then future husband along with me at the bank when I opened my account, as the paperwork for which the French are legendary is never easy to understand, less so when your command of the language is a little shaky.

The opening of the account, language issues aside, was fairly straightforward. I was entitled to open a savings and checking account because I was employed. Had I not had a job, I still could have opened an account if I had had a French cosponsor, or a longterm visa (ten years or more). I actually opened two checking accounts: one of my own and a joint checking account with my future husband.

To be honest, I’m not sure how the credit system in France works. I think it’s much more flexible than in the United States. I base this upon reading the blogs (in French) of French expatriates, explaining how the American system works. As they mention the points system in detail, I can only extrapolate that it doesn’t exist in France.

On the other hand, doing anything that involves any sort of long-term financial relationship involves a staggering amount of paperwork (link also in French).

For example, when I took out a student loan recently it involved two steps: opening a bank account with the bank issuing the loan and then applying for the loan itself.

For the bank account, on which I was the sole signer, I needed relatively few documents: the last three month’s worth of payslips, my long-term work contract, the last three month’s worth of papers showing my child subsidies from the state, a rent receipt from the landlord, an electric bill and my passport.

For the loan, for which my husband had to cosign, we had to supply all of the above, plus the equivalent documents for him, my school acceptance letter, a letter attesting to my receiving a grant and a copy of our family book (an official book given to couples when they marry in which your marriage, divorce, birth or death of all children and then your own death is recorded).

I’m sure you’re tired just reading that list. It took me three trips to the bank to supply all the necessary paperwork.

Having such a large amount of supporting information is necessary because financial decisions are not based on a credit score. Instead they are based on your past financial history as evidenced by your payslips etc and your ability to continue paying, shown by your work contract. As a new immigrant you can get a loan, as long as you have a job and someone willing to cosign for you.

There is bankruptcy in France, although it remains relatively rare. The step most often employed before bankruptcy, l’interdit bancaire or when you no longer have the right to have a bank account, is considered very serious and scary. People will often go to drastic measures to avoid l’interdit bancaire, as you are then forbidden from having a bank account for five years. You can imagine what a hassle this would be.

There is no information exchanged between the United States and France as to credit history, loans taken out and repaid or not, etc. While this is working to my advantage (my American student loans are so high that i would never be able to get another loan in France if the French knew about them) I can see how it would be a disadvantage for French people moving to the United States. Luckily for my husband, when we move back to the US I’ll be there to help him as he helped me.

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Guest Post at Mrs Micah
January 3, 2009 at 6:05 pm

{ 6 comments… read them below or add one }

Eponine August 11, 2008 at 6:52 pm

My boyfriend has been in the U.S. for almost three years (from France), and is just now thinking of trying to get a credit card because he has no credit history here. It’s funny, because I’m trying to eliminate credit cards from my life, and he’s just hoping he’ll be able to get one!

My Daily Dollars August 11, 2008 at 7:20 pm

Goodness! That is quite a lot of paperwork. Hard to believe that we actually have it pretty easy with the ole FAFSA system.

Zhu August 11, 2008 at 9:57 pm

Wow, I had no idea it was that complicated in France. But we sure do love paperwork…

C August 12, 2008 at 6:49 am

You say yourself that if the French system was aware of how much you still owe in student loans, it would never have allowed you to take out another one. Don’t you find that a bit irresponsible on your part, and contrary to your own goal of “fiscal responsibility”? Even though you are going to get away with it, I hope you’re not encouraging others to follow such a bad example of money “management”. (PS: I live in France too)

Observer August 17, 2008 at 12:40 pm

Wow, the French system is like ChexSystems on steroids.

L’interdit bancaire, mon Dieu! Zut alors!

A September 3, 2008 at 8:11 am

Hello! I’m an American in Paris, in need of a student loan. I finished school in July and still have not paid the balance on the tuition. I am concerned about the long-term (CDI) contract requirement. I have worked 9 months with a company here: 6 months as an intern, then 3 months in trial period of CDI. At the end of these 3 trial months, which is in two weeks, I am leaving since it is not my thing. I hope to find something quickly (likely here in Paris), but may likely start with another preliminary 3-6 month contract: Does this mean I will be denied? Any advice on how to work this? Otherwise, I have a cosigner, some savings, a French bank account etc.
Thank you.

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