No U.S. credit history? No problem if you want to apply for a credit card
Building a U.S. credit history is important for anyone who’s recently moved to the U.S. because a good credit score is required to do basic tasks like rent an apartment, lease a car and get a cell phone plan.
Nova Credit is a cross-border credit bureau that allows newcomers to apply for U.S. credit cards, phone plans, and loans using their foreign credit history.
American Express is a Nova Credit advertiser. This content is not provided by American Express. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authors alone, and have not been reviewed, approved or otherwise endorsed by American Express.
Having good credit in the United States is a key necessity of everyday life. Each year, Americans make more than 41 billion credit card transactions with nearly $3.8 trillion swiped annually.
Building a U.S. credit history is important for anyone who’s recently moved to the U.S. because a good credit score is required to do basic tasks like rent an apartment, lease a car and get a cell phone plan. But to get credit, you typically need credit, which is often an obstacle for most newcomers to the U.S.
Here are the four main ways you can build your credit history if you’ve recently moved to the U.S.
1. Use your foreign credit history in the U.S.
Traditionally, most newcomers to the U.S. have had to start from scratch when building their credit history. Their credit history stops at the border, which can be particularly frustrating for those who have built a credit history abroad. If you’re from countries like Mexico, India, or Canada and have a record of on-time payments at home, you can now use Nova Credit to translate your foreign credit history into an equivalent report for U.S. lenders through our partner organizations. Companies like American Express partner with Nova Credit to incorporate the choice to share your foreign credit history into their application process. Once you establish a U.S. credit account using the credit you’ve earned elsewhere, you can start building a local credit history. Here are some cards we suggest for U.S. newcomers.
You can use your foreign credit history from eligible countries to apply for an American Express ® Personal Card in the U.S.
2. Apply for a credit card
Even if you’re not in the habit of using a credit card to make purchases in another country, getting a U.S. credit card can be a great way to start building a score. The first thing a credit card company does when you apply for a card is to check your credit score and credit history. Lenders want to ensure you have a good history of financial management. If you’ve never had a loan or credit card history or aren’t eligible for a service like Nova Credit, there may be other options better suited for you. You can apply for a secured card, which requires a cash deposit to cover the bank if you stop making payments. The amount you deposit typically represents your credit limit. Alternatively, you might want to consider a retail store card or cards designed for college students. While most cards report to credit bureaus, make sure that the provider will share your account information with Experian, Equifax, and TransUnion—the three main U.S. bureaus. Pay attention to the interest rate (also called the annual percentage rate or APR) as well as the fees, credit limit, and rewards (such as miles or cash back on purchases) when selecting your first U.S. card.
3. Become an authorized user
If you have a trusted friend or relative in the U.S., they can add you as an authorized user to one of their credit accounts. Your friend or relative will be the primary account holder and legally responsible for the balance, but you can make purchases and use the card as if it were your own. On-time payments by the primary account holder can help you establish and build your credit history, but keep in mind that if he or she doesn’t stay on top of payments or has a high credit utilization (uses a high proportion of available credit, which is considered a negative), your newly established credit score could suffer.
4. Get a credit-builder loan
A credit-builder loan differs from a traditional loan. Banks and credit unions will deposit a small loan into a locked savings account, which you will pay back in small installments over 6 to 24 months. If you don’t have a U.S. credit history, some lenders may use your bank account balance and employment information to assess your loan application. According to the Consumer Financial Protection Bureau, these loans typically range from $300 to $1000. On-time payments are the most important part of a credit-builder loan rather than the amount as the lender will report your on-time payments to the major credit bureaus. At the end of the time period, you will receive all of the money back and have built some credit history.
The takeaway
Moving to the U.S. can be confusing, but you can take the steps above to start your new life on the right foot. While it can take some time to establish a good credit history, consistent and responsible use of your first card will help you build a score and benefit from rewards, lower interest rates, and other opportunities.
Use your foreign credit history to start your U.S credit history
New to the U.S.? Check if you can use your country's credit history in the U.S. to apply for credit cards and start your U.S credit history using Nova Credit.
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