How Immigrants Can Build a Credit History

By Dawn Handschuh, Personal Finance Writer

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immigrants with no credit history

Building a solid credit history is something everyone should do because good credit makes it easier to get the most competitive interest rates on mortgages, car loans and other financing. But for those who have newly arrived from other countries with no U.S.-based credit history, just getting the electricity turned on in your new home may prove daunting.

Hundreds of thousands of foreign business professionals working for multinational corporations come to the United States on temporary work visas that can last as long as six years. But even for affluent non-Americans, building credit here can be challenging.

In America, credit history is built from scratch, regardless of how well-established you were in your homeland. With few exceptions, American lenders don’t consider credit histories from countries outside the U.S. In many areas, like Europe, debit card use is the norm, so Europeans may appear to be a blank slate to American lenders.

For newly arrived non-resident workers or immigrants, the first thing to do is apply for a Social Security number (SSN).

Then take these steps to build a credit history:

Open a bank savings and/or checking account. Fund it with automatic deposits of your paycheck.

Obtain a major credit card. You don’t have to be a U.S. citizen or green card holder to get a credit card. You can get a secured card linked to the bank where you opened your savings account. The bank will freeze a specified amount of money in your account and issue you a credit card in that amount. Use the card like a regular credit card, and pay it off religiously to demonstrate your trustworthiness. Avoid department store cards, which aren’t as valuable in establishing credit and carry higher rates.

You can also ask a friend or family member already living here to open a joint credit card. (Card issuers may limit the number of authorized users, so if your relative has already listed a spouse as an authorized user, you may not be able to add your name.)

Use the card responsibly, paying off the balance in full each month. In time, the issuer will likely increase your credit limit, and you’ll receive a flood of other credit card offers. Once you begin using your own card, cancel the joint credit card.

Student immigrants may be able to obtain a credit card through their school’s credit union.

Establishing a credit history early will help you when you need to finance a larger purchase, like a mortgage or car loan. Different banks may employ different lending criteria, so inquire at several banks for guidance. Be prepared, at least initially, to make a larger-than-normal down payment or to pay a higher rate, because of your perceived flight risk.

Remember, building credit takes time.

Knowing what to do to establish credit is a start in the right direction, but you should also be aware of things that can hurt your credit. Read “The 5 Most Damaging Credit Blunders ” to make sure you’re not putting yourself at risk as you build your credit history.