If you recently moved to the United States, either as a student, for work, or for family members, you will face all the joys but also the tribulations of relocation. Most acutely, the financial system may likely shut you out.
People who’ve moved across borders haven’t typically had credit in the US and have no US credit history. It’s difficult or almost impossible to obtain a credit card, apartment rental, car lease, loan or mortgage without a credit history in the United States. You might be charged a high security deposit upfront, or worse, rejected.
As such, building a US credit history is important for anyone who’s recently moved to the US in order to ensure you can access the basics. Building credit is often a catch-22 of needing to have a credit product (loan, etc) to build a credit history and needing a credit history in order to obtain a credit product. And the credit reporting industry certainly isn’t simple.
You also should be careful to build your credit responsibly. Credit products typically come with interest fees or other costs. Lots of creditors, including credit card companies, might offer low introductory rates on products with rates that can then increase substantially after a few months.
1. Transfer your credit score to the U.S.
Although there are different ways to build credit, you might be able to transfer your existing credit from abroad to the U.S using Nova Credit. With your consent we locate, translate, and transfer your international credit data to our business partners to help you get the credit you’ve earned. We are a new system for financial movement, servicing the continuous flow of people around the world.
Essentially we move credit reports from countries like Mexico, India, Australia and others into equivalent reports for U.S. lenders. That way, you can use your international credit file to apply for U.S. loans, apartments, and more. Effectively, Nova Credit serves as an enabler to “yes”, and lenders are able to serve a new customer segment - you!
Learn how to transfer your global credit through Nova Credit.
2. Apply for a secured credit card
One way to get started with building US credit is by actually using a credit card to prove your creditworthiness. If you cannot transfer your global credit, start with applying to secured credit cards to help build your credit score in America. Unfortunately, a secured card requires that you put down a cash deposit into your bank account or credit union. Your spending limit will then generally be the amount that you have deposited.
Important: Make sure that the issuers of the secured card report your payment history to at least one of the three major US credit bureaus, which are Transunion, Equifax and Experian. If they don’t disclose this on their websites, make sure to reach out to their customer support teams. Without it, the secured card won’t help you build a U.S. credit score (and it’ll only help you build a credit history at the bureaus the issuer reports to).
Much of the time, a Social Security Number (SSN) is not required and issuers will accept an Individual Taxpayer Identification Number (ITIN) as well. Some banks also accept passport, a state-issued photo I.D, or a driver's license for identification, though you typically have to do this in person. Look out for banks or credit unions that can accept multiple forms of documentation for immigrants. In fact, stopping by a local bank branch and explaining your situation can sometimes be more effective than applying online, because bank agents are sometimes able to check whether they can pre-approve you for a card.
3. Establish a relationship with a bank through a savings or checking account
Opening a checking or savings account with a bank may help you get a credit card or loan with that financial institution down the road. As you build a relationship with the bank early on, you start signaling financial stability.
Whether it’s a large U.S. bank or a credit union, all are fine, but before deciding on one, you should review and think about what’s important to you. Does it have a lot of accessible ATMs? Does it have good customer service? What about monthly or annual fees? Important: After you open a checking account, you should be careful to not overdraw as this will negatively impact your US credit report.
4. Apply for U.S. credit with a co-signer
One other way to make it easier to get a new credit product is to apply with a co-signer that already has an established credit history in the US. This means that you list them as part of your credit application, and are able to benefit from the fact that they have an established U.S. credit footprint. However, make sure they know what they’re getting into -- a co-signer agrees to be responsible for your debt if you don’t pay it and default. Check for co-signer options when you apply for different credit cards or loans.
5. Pay on time, monitor and change products, and be patient
As soon as you have a credit product (credit card, student loan, mortgage, etc) that’s being reported to the major U.S. credit bureaus, you’ve officially begun building credit! One of the most important parts of building credit is showing creditworthiness by paying these off on time. If you have a credit card, you should generally aim to use it at least once a month to demonstrate you know how to use credit responsibly over time. Another important factor to your credit score is your credit card utilization: a good rule of thumb is to not use more than 10% of your limit. Also be sure to check the latest day your payment is due when you can pay so that you don’t miss it. Usually, you can set up autopay from your checking account to be sure you don't fall behind.
In most cases, after a few months of paying on time, you become more likely to get approved for another credit product as you are now logged in the U.S. credit system. This could mean that after a few months of making on-time payments on your secured card, you will become elligible for a credit card that doesn’t need to be secured. Check your credit score regularly and look at credit card offers with a higher credit limit, as these result in improved credit scores as well. To help monitor your credit and explore other products, you can use the free credit score and monitoring tools from Credit Karma or Nerdwallet (among others).
That said, it can take multiple years to get back to the credit score that you had in your home country. It takes patience and close monitoring to build credit in the U.S.
Millions of people have moved to America over the centuries and there are lessons in financial migration from all of them. The easiest solution is still to not have to build credit from scratch with a secured or other new-to-credit product but simply to transfer your credit from your home country. You can also get there by investing the time in smart credit and savings products, while continuing to be diligent in monitoring your score. Good luck on your journey!