It can be difficult for newcomers to the U.S. to build credit. Without a credit history, they are unable to rent an apartment, buy a car, apply for a credit card or get a mortgage. A credit report is specific to the country where people live so they cannot rely on a previous credit record in another country.
In the U.S., anyone who extends credit, from banks that issue credit cards to cellphone providers, will check credit history. It is only when someone applies for and gets the credit that the lender starts reporting and the person gets a credit file with the three major credit bureaus in the U.S.
Building a credit score may seem overwhelming to immigrants because it can take time but there are several ways to start.
- Use a free credit builder
A credit-builder loan is a simple, effective way to develop a positive credit history. Kikoff provides a free credit builder so you can establish a credit history as an immigrant. You are instantly approved after verifying your identity without needing a bank account, a credit card or a credit score.
You receive funds from a loan to kick off a payment history. Cash in the amount of $12 is deposited instantly and you pay back $1 every month. With only one click a month, you are able to start building a credit history.
- Apply for a secured credit card
One of the ways to start building a credit history as an immigrant is to go to a local bank and apply for a secured credit card backed by funds put into an account. You can then charge the secured credit card up to the amount being held in the bank account. For example, if $250 is deposited into the account, you can charge the card up to $250.
To apply for a secured credit card, you need a permanent address, employment, a bank account, a social security number (SSN) and an individual taxpayer identification number (ITIN). After a period of using and paying the card on time, the bank may offer you a regular credit card with a certain limit.
- Apply for a credit card aimed at immigrants
A handful of credit card products cater to international citizens. The companies report credit card activity to the three major credit bureaus and this helps new immigrants to go from having zero credit visibility. It is important to make sure that any credit card product you consider will report your account activity to the credit bureaus.
- Use American Express Global Transfer
The American Express Global Transfer program uses an existing American Express account history. It is possible to apply for this program after being a primary cardholder on an American Express card for at least three months and there are various other conditions too, such as having a U.S. physical address, a phone number, and a government-issued ID.
- Get a co-signer for a credit card
You will not be able to get a credit card without a credit history from most institutions. It can help to get someone to be a co-signer on a card. This can be challenging when you are new to a country.
However, if you have relatives or close friends who have been in the U.S. longer than you and have managed to build up a good credit score, you may be able to get the person to co-sign for a credit card. This means that the person agrees to be responsible for the debt if you are unable to pay it.