How to Build Credit as a New Immigrant

Activities that U.S. citizens take for granted, such as applying for a new job or purchasing insurance, are more challenging for immigrants due to their lack of a U.S.-based credit history. Those who lack a credit history are a "wild card" for banks since banks do not have access to a credit history with which to assess the immigrant's risk level.



Your credit report and scores will not transfer to another country when you move. Even countries that share certain credit bureaus, such as Canada and the U.S., do not transfer credit records from one country's system to the other. Immigrants to the U.S. must build credit from scratch to qualify for credit-based services.

Things You'll Need

• Secured credit card
• Authorized user account
• Bank account

Instructions

1. Apply for a secured credit card. Because secured credit cards are specifically designed for those with poor credit or no credit, approval often isn't contingent on a credit check. You must make a cash deposit which then serves as your spending limit on the card. When the credit card company reports the account to the credit bureaus, the credit bureaus will create a file in your name.

2. Ask a loved one with established credit to add you to a credit card account as an authorized user. The cardholder's credit company will then add the account to your credit report. Provided he pays his credit card bills on time, the positive payment history associated with the credit card will help boost your new credit rating.

3. Borrow against your own money. You can apply for a personal loan with your bank and, provided the money in your bank account meets or exceeds the loan amount, you can use your bank account as collateral. By placing a hold on your bank account for the total loan balance the bank eliminates its risk of financial loss. This often renders an extensive credit history unnecessary.

4. Pay your creditors on time. Creditors report missed payments to the credit bureaus and they show up on your credit report. Not only do missed payment notations leave you with a lower credit score, they signify that you pose a higher than average lending risk -- leaving you paying your creditors higher interest charges than an individual with untarnished credit.

Tips & Warnings

• You must have a Social Security number before you can build a credit profile. Immigrants with a valid visa can apply for a Social Security number with the Social Security Administration.

• It can take up to six months for the credit bureaus to assign you a credit score after creating your credit report.

References

• Experian; Credit History Will Not Move With You to Canada; Maxine Sweet; April 2011
• Bankrate.com; How to Build Credit As a New Immigrant; Leslie McFadden; August 2010
• "The Boston Globe": Advantages and Disadvantages of Being an Authorized User; April 2009
• Bankrate.com: Passbook Loans -- Paying to Borrow Your Own Money; Laura Bruce; 2011

Resources

• Read this Article in Spanish
• Social Security Administration; Social Security Numbers and Immigrant Visas; February 2011