Credit is the foundation of financial freedom.
If you’ve recently moved to the United States (or are still planning your move), establishing credit will be a key step in your journey. It’s an essential part of renting apartments, leasing cars, and getting mortgages. Some employers may even check your credit score before hiring you.
For immigrants, the process of building credit can seem overwhelming. Even though you may have a proven credit history abroad, your profile effectively resets in the United States.
The good news is, there are multiple ways to establish a strong credit history in America.
It only takes a bit of patience, prudence, and planning.
Here are 7 Great Ways to Build Credit as an Immigrant in the U.S.:
1. Get a U.S. Credit Card
Credit cards are the most powerful credit-building tool.
When strategically used, they provide greater financial flexibility while helping you build credit along the way.
So what’s required to get a credit card? That depends on the provider.
Most banks will request a Social Security number (SSN) for identification, therefore limiting access to U.S. citizens or non-citizens with work permits. If you don’t have a Social Security number, some card issuers will also accept an Individual Taxpayer Identification Number (ITIN) as issued by the Internal Revenue Service.
If you don’t have an ITIN or SSN, don’t worry. There are other avenues to get a credit card.
2. Request a U.S. Card From Your Home Bank
If you have any trouble getting a credit card in the United States, consider contacting your original bank or credit provider. If they have a presence in the United States, they should be able to get you a credit card.
For example, American Express will actually allow you to apply for a U.S. card before you leave for the United States. Simply demonstrate that you are:
- An existing (primary account) cardholder
- Maintaining an account in good financial standing
- An American Express cardholder for over 3 months
While American Express is one of the larger global providers, other international banks also offer similar services.
3. Get a Secured Card
If the first two options won’t work for you, don’t worry. The next one will.
We recommend getting what’s known as a secured card.
Unlike standard credit cards, secured cards require a security deposit that serves as collateral for your line of credit. While the security deposit can range in size, your credit line will either be equal to that deposit or a large percentage of it.
Despite these extra stipulations, a secured card functions exactly like a standard credit card. That means you’ll be able to enjoy all the perks of credit (like making car rentals and hotel reservations) without the limits of debit.
So long as you make responsible charges and keep your balance low, you’ll gradually build credit every month.
4. Become an Authorized User
This is a great tool for family members able to help relatives build credit. Authorized users essentially have access to another person’s credit card without the legal requirement of paying it.
All you need is a primary account holder who authorizes you to make charges to their account. You technically don’t even have to make payments or use the card once you’re added to their account.
As long as the account holder has strong credit and uses it wisely, your credit history will grow alongside theirs.
You can also open a joint account with a family member or friend who has a good credit history. Be mindful, however, that both you and the account holder are responsible for all charges made on the card.
5. Loan Tip #1: The Credit Builder Loan
Gaining access to loans can be very difficult without having an established credit history.
That’s where the credit builder loan comes in.
How does it work? A credit builder loan essentially pays out money in reverse. So rather than getting a lump sum at the beginning, you’ll receive the money at the end of the loan.
This is very attractive to lenders because it minimizes their risk, and it’s useful for borrowers because they can quickly build their credit. You don’t even need to have a substantial credit history to access a credit builder loan. Just ensure you make your payments on time, and your credit history will grow.
Check out Self Financial to get started!
6. Loan Tip #2: Get a Cosigner
This option can be a bit more demanding. To get a cosigner, you must have a close relative or friend in the United States with a proven credit history.
If you do have a willing relative with solid U.S. credit, lenders will be far more likely to extend loans to you (and even provide attractive interest rates along the way). Cosigning is extremely prevalent between spouses, parents and children, other relatives, and even close friends.
Just be sure to stay on top of payments, otherwise your co-signer’s credit will be adversely affected.
7. Bonus Tip: Get Credit for Timely Payments
Did you know you can get credit by paying your rent on time?
It’s true.
While rent payments and utility bills usually don’t appear on credit reports, you can fix that. Simply ask your landlord to report your positive payment history to credit bureaus, and you’ll profit from your promptness.
All three credit bureaus will incorporate your rent payment into their reports, so you can have confidence your discipline will be rewarded.
Check out Experian RentBureau to learn more!
Getting Started
At uLink, we know how hard it can be for immigrants to get settled in the United States.
That’s why we’re committed to helping you in every way we can.
With great exchange rates and fees as low as $0, you can send more money home than ever before. Plus, take advantage of our exciting new offer and receive a $10 gift card to major retailers on your 1st, 2nd, and 5th transactions.
