How to Build Credit as an Immigrant
Like for anyone, it’s important to build credit as an immigrant. As an immigrant to the United States, one of the biggest barriers to achieving success in the land of opportunity is the establishment of credit. New immigrants will learn very quickly that renting an apartment, getting a credit card, or even buying a car in the United States can be next to impossible without any credit history.
The reason for this is that a credit report is specific to the national boundaries in which you reside. So if you move or emigrate somewhere else, you cannot bring with you your credit score how matter how great it was. Differences in national laws and how information is collected or stored dictate that credit is only applicable for people in that country who have achieved credit in that country. Therefore there’s no way for you to transfer credit information from your home country.
What does this mean?
Simply put, this means that you have to start from scratch to build your credit history if you are an immigrant. Without any credit history, you are not necessarily starting off on the wrong foot. You just have many strides to take. Having no credit history is certainly better than having a bad credit history. So, any immigrants who might have had a bad credit history back home benefit from the chance to start over. In any case, it can be challenging to simply get started. Much like getting your first job, without work experience people are not going to hire you. Without any credit history, most people are not going to give you a credit card. This is especially after 2008 when credit card and lending requirements were altered.
Getting the Social Security number
One of the most important things to have is a Social Security number. A social security number is not required to have a credit history but it is the only unique identifier to you as an individual, the only thing that will help you to identify your credit file.
Getting a Credit Card
Once you have an SSN, it’s important to seek out any type of credit card that you could use regularly. A credit card given to you without any credit history will more than likely have an unforgivingly high interest rate. For this reason, if you’re able to obtain a credit card from a generic company like this, you have to work incredibly hard to make sure that no payment is ever late. Buy your regular groceries with your credit card and then pay it off at the end of the month before any interest is accrued.
If you shop regularly, consider applying for a credit card from that store. Many clothing stores, for example, offer store based credit cards which you can use to build up your credit. However, be careful that you don’t simply go out and start applying to a dozen different stores at once. Each time a company runs a background check for your credit score, that counts against you. It is a marginal amount compared to many other facets of the credit score. Nonetheless, be cognizant of it especially when you’re working so hard to build up your credit from nothing.
In many cases, you are going to get incredibly low credit if you are approved for anything like a bank card or a store credit card. Chances are you will get limits such as $300 or $500 with which you can do very little but at least it can help you get started.
This process is one where slow and steady really does win the race. In United States, anyone who is considering giving you credit will check your credit history. When you are brand-new, you will simply have no credit information on file. Only after you apply for and get credit can lenders start reporting information about you and your account. Once this happens then you start getting credit on file. This indicates how many accounts you have, how much you owe, and whether you pay your bills on time.
Being from another country has absolutely no bearing on the way that your credit is reported. You will not have any reference in your credit file to the fact that you are under immigration status or that you have a different nationality. All they will see is your credit score and your credit history.
So, small amounts of money lent to you even if they come from a store credit card will start this process rolling. In California, for example, there is the Mission Asset Fund, an organization which lends small amount of money to members in the organization with no fee and no interest. This nonprofit service helps immigrants to borrow money on the books and start getting credit.
- Again, start off with one account and slowly work your way to multiple accounts with time. Don’t apply for all of them at once.
- Set up automatic payments for your bank if you can so that every single thing you pay for is paid for on time, without fail. You can even set this up for the credit cards that you receive.
- If you can, find a place to rent where your rental payments are reported to your credit company. If your landlord doesn’t already report payment history, you and your landlord can sign up for electronic rent payments. These are automatically generated and reported to your credit score.
- As always, check on your credit score as regularly as possible. There are free sites that help you to do this. This will help you to make sure that no one else uses your personal information to hurt your credit score.