A credit score is a three-digit number that provides a brief overview of an individual’s personal credit. It significantly impacts important financial matters, such as whether or not you will be approved for lines of credit and loans

A credit score is derived from the details in your credit report. These details are sensitive and include things like your name, your date of birth, your address, and your Social Security number. A credit score can have an impact on many aspects of your life, even if you aren’t a resident of the United States. If you are from another country and you don’t have a Social Security number (SSN), you’ll learn more about credit scores, why they’re important, and how you can establish your credit without a Social Security number below.

What is a credit score? 

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A credit score is a three-digit number that reflects your credit history and is drawn from the information found on your credit report. Your credit report contains information pertaining to an individual's financial history, such as the amount of debt you carry and how you’ve managed that debt. Loans, lines of credit (credit cards), phone bills, electric bills, and other utility bills, and even medical bills are all featured in a credit report. Putting it simply, it contains a summary of any money owed and payment history.

Financial history is reported to TransUnion, Experian, and Equifax, the three main credit bureaus in the U.S. Whenever you open a credit card, take out a loan or open any other financial account (including utility bills), that information is reported to the credit bureaus. The credit bureaus keep track of how to manage your debts — when you make payments on your debt and how you have paid your debts back. The information reported to the credit bureaus is compiled in a credit report, and that information is used to calculate your credit score. 

Credit scores range from 300 to 850. The numbers are assigned a value which ranges from “excellent” to “poor” and is broken down as follows: 

  • 800-850: Excellent
  • 740-799: Very good
  • 670-739: Good 
  • 580-559: Fair
  • 300-579: Poor

The higher your credit score is, the better. Those who manage their debts responsibly receive a better credit score than those who don’t. For example, if you make payments on time and for the amount that is due, you don’t carry excessive amounts of debt, and you use your credit wisely, your credit score will be higher. However, if you carry a large amount of debt, you don’t make payments appropriately, and if any of your accounts are no in good standing, your credit score will be negatively affected. 

Why credit scores are important

Your credit score is important because it can impact your financial well-being. Lenders and other financial institutions use your credit score, as well as the information found on your credit report, to determine your risk as a borrower. Those who have a high credit score are considered less of a risk because they are more likely to manage their debts responsibly; lenders will assume you’re more likely to repay the money you borrow in a timely manner. Individuals who have a low credit score are considered high risk because they are more likely to be irresponsible with their debt by making late payments, missing payments, or defaulting on loans. 

Here are the top four reasons your credit score is important: 

  • It affects your ability to borrow money. You’re likely to borrow money at some point in your life; for example, you might need to take out a loan or open a credit card to make large purchases. The higher your credit score, the better your chances of being approved for a loan or a credit card will be. Additionally, a high credit score also affects the amount of money you’ll be able to borrow. A high score means you’ll be able to borrow more money, but a low score means you’ll have to borrow less (if you’re approved at all). 
  • It affects how much money you spend. Your credit score can also affect how much money you owe. When you take out a loan or open a credit card, you’re charged an interest rate, the amount a lender charges to borrow money. The higher your credit score is, the lower your interest rates will be because lenders will consider you less of a risk. The lower your credit score is, the higher your interest rate because lenders consider you a high risk. Interest rates affect the amount you spend to repay any money you borrow. For example, if your interest rates are low, you’ll pay less over the life of the loan; however, if your rates are high, you’ll pay more over the same period. Borrowers with an unhealthy credit score can spend tens or even hundreds of thousands of dollars more in interest than those who have a healthy credit score. 
  • It affects insurance premiums. Your credit score can affect the premiums on car, health, homeowners, renters, life, and any other type of insurance. Like lenders, insurance companies take your credit score into consideration to assess your risk. Insurance companies consider those who have a high credit score less of a risk than those who have a low credit score. In the eyes of an insurance company, how you manage your financial obligations reflects how you manage other aspects of your life. If your score is high, for example, you will be deemed more responsible in paying your debts, which means you’re also more likely to drive safely, leading to a lower car insurance premium. 
  • It affects your access to utilities. Many utility providers like phone, Internet, and cable companies check credit history prior to opening new customer accounts. Depending on their policies, you may be required to pay more for the service if your credit score is low. For example, you might be asked to pay a security deposit or you may even be denied the service. 

Can you have a credit score if you don’t have a Social Security number? 

The credit bureaus use sensitive information to keep track of your credit history. This information includes your Social Security number, your name, your date of birth, your address, and your employment history. While a Social Security number is an identifier that credit bureaus use to locate and collect your information, it’s only one of several identifiers. If you don’t have a Social Security number, credit bureaus can access your credit history using the other identifiers like your name, date of birth, address, and employment history. 

While a Social Security number does improve the accuracy of matching credit history with a consumer, it isn’t necessarily required to create a credit report and an accompanying credit score. 

Why a credit score is important for non-U.S. residents

Credit scores are just as important for visitors to the United States as they are for U.S. residents. If you are an international student studying in the U.S., for example, you may want to purchase a car and might need to take out an auto loan. Just like U.S. residents, your credit score will affect your ability to secure this loan; the better your score, the higher your chances of being approved for an auto loan and the lower your interest rate will be. 

Non-U.S. residents may also want to rent apartments, open accounts with utility providers (cell phone, cable, and internet providers, for example), or even purchase a home. Credit scores affect all of these major life decisions. 

How to establish a credit score without a Social Security number

If you’re living in the U.S. but you aren’t a resident and don’t have a Social Security number, you can still establish a credit score. Having a credit score can be helpful while you’re living in the U.S. for a variety of reasons. A Social Security number is only one of the identifiers that credit bureaus use to create a credit report. 

Below, we’ll look at some of the different ways you can establish credit without a Social Security number while you are living in the United States. 

Get a credit card

Credit card companies are the largest sources of customer payment histories, and they report these histories to major credit bureaus. If you have a credit card account, that account will be reported to the credit bureaus and the credit bureaus will use available personal identifiers to compile a credit report. If you don’t have a Social Security number, these identifiers include your name, date of birth, address, and employment history. 

New applicants are often asked to provide a Social Security number when applying for a credit card as it helps to verify the identity of applicants; however, there is a way that you can get a credit card without an SSN. How? With an Individual Taxpayer Identification Number.

If you are a non-U.S. resident and you are paying taxes, you may be able to secure a credit card with an Individual Taxpayer Identification Number (ITIN). An ITIN is issued by the Internal Revenue Service (IRS) and serves as a tax-processing identification number. This nine-digit number is issued to people who are required to have a taxpayer ID but are ineligible for an SSN, as it allows them to comply with tax laws and helps process and keep track of payments and tax returns. Many credit card companies will accept an ITIN in lieu of an SSN. To apply for an ITIN, contact the IRS and provide the necessary documentation. 

Once you secure a credit card, make sure you manage it responsibly. Avoid carrying a high balance (using most or all of the line of credit), and make your payments on-time. If possible, pay the balance in-full. Responsibly managing your credit card debt will allow you to achieve a healthy credit score. 

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Open a bank account

Like credit card companies, banks also report information about consumers to credit bureaus. The age of your account (how long it’s been open) and how you have managed it are factors that will add to your credit score. Therefore, opening a bank account is highly recommended if you want to secure a credit score. 

If you have an overseas bank account, it will not contribute to your credit score; If you want to develop a U.S. credit history, you will need to open a bank account with a U.S.-based financial institution. You do not need to have an SSN to open a bank account; an ITIN can be used instead. If you do not have an ITIN, there are financial institutions that will allow you to use your passport, an alien identification number, or another identification number that has been issued by the government. 

Check with banks and credit unions in your area to learn what forms of identification they will accept to open an account. 

Borrow money

You can also build credit and develop a credit score by taking out a loan. Like a bank account, some financial institutions will allow you to take out a loan without a Social Security number. You may be able to use an Individual Taxpayer Identification Number, passport number, an alien identification number, or government-issued identification instead. Like opening a bank account, you will need to check with financial institutions to find out what type of identification they require. 

Once you take out a loan, information pertaining to your account will be reported to the credit bureaus, and therefore, you’ll be able to establish your credit and get a credit score. In order to achieve a healthy credit score, make sure you properly manage your loan. Make payments in a timely manner for the amount that is due, and pay it off within the loan terms. If possible, paying it off early may improve your credit score; however, before pre-paying, make sure you check with the lender, as some institutions do charge penalties and fees for pre-payment on some loans. 

Be responsible with utilities

Credit card companies, banks, and credit unions aren’t the only institutions that report your information to the credit bureaus; utility companies do too. Cell phone, electric, cable, internet, and other utility providers will report the information related to your accounts to the credit bureaus. By simply having an account with any of these service providers, you can build your credit and acquire a credit score. 

As with a credit card or a loan, make sure that you pay your utility bills on time, and that you pay the amount due. If you make late payments or miss payments or if your account is terminated, not only do you stand to lose the service, but your credit will also take a serious hit. 

Keeping track of your credit score

Once you have established a credit history and a credit score, it’s important to keep track of both. While living in the U.S, your credit score will have a big impact on your financial well-being and ability to secure certain services. 

Regularly checking your credit report will not only let you know assess your financial standing but also allow you to address any potential issues. For example, if your credit report contains information that doesn’t relate to you – a credit card that was opened in your name that you never opened or charges to your accounts that you never made – it could be a sign of identity theft. Credit reports can also reflect inaccuracies – late payments made on time, or missed payments that you made. These inaccuracies can negatively impact your credit score and your financial well-being. 

If you spot any issues with your credit history, you can file disputes with the credit bureaus. Make sure that you have the necessary documentation to back your disputes (paid bills and canceled checks for payments made, for example). Once any disputes are rectified, your credit score will go up. 

How Nova Credit can help you establish credit

A credit score is important for anyone who resides in the U.S., permanent residents and non-residents, alike. While you can take the steps above to build your credit, you can now use Nova Credit to translate your international credit history into an equivalent report for U.S. lenders. Companies partner with Nova Credit to incorporate that information directly into their application process and make it easier for you to get approved for credit cards, loans and other products. Once you establish a U.S. credit account using the credit you’ve earned, you can start building a local credit history. 

Nova Credit currently connects to international credit bureaus in Australia, Brazil, Canada, India, Mexico, Nigeria, South Korea and the UK.

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