How to build your credit score in the U.S. as an immigrant
If you’re planning on moving to the U.S. or you’ve just arrived then you need to start thinking about your credit score. In the United States credit is very important to everyday life and will affect your ability to rent, get a mortgage or secure a personal loan. It’s even possible for potential employers to check your credit score before hiring you.
Building your credit can take some time. It is important to be patient and to be as informed as possible. In this blog we’ll be exploring everything you need to know about building your credit score in the U.S. as an immigrant, including:
- Do you have a credit history in the U.S.?
- Secured credit cards
- What if you don’t have a Social Security number or U.S. credit history?
- Should you co-sign on a credit card?
How to start building credit in the U.S.
The majority of immigrants begin life in the U.S. without an established credit history. Some immigrants may come from a country that does not have credit-reporting agencies like France.
Immigrants from other countries, like the UK and Canada, that have similar credit systems to the U.S. won’t be able to transfer their credit history from those countries to the U.S. This can be very difficult for immigrants just starting out. From the beginning you’ll be invisible from a credit perspective which is why it’s important to get started as soon as possible.
There are few things you need to do to start building credit in the U.S. The steps you take will largely depend on your personal circumstances and whether you already have a credit history.
- Do you have a credit history in the U.S.?
If you’ve made certain payments in the U.S. (such as student loans) you may already have a credit file. To find out whether you have a credit history you can ask for a free credit report from the 3 main credit agencies in the U.S.: Experian, Equifax and TransUnion via their official website AnnualCreditReport.com. You can also phone them at 877-322-8228.
If you find out that you do have credit history and your credit history is above “fair” - a FICO score of 712 to 880 - then you can renew your credit journey by getting a credit card. If your credit is considered to be fair then you will be able to obtain a credit card aimed at those with average credit.
- What is a good credit score?
In the US the average credit score, according to data from 2022, is around 716. While Experian states that there is no magic number when it comes to credit, they also say that a good credit score is anything between 881-960. However, these numbers change over time so it is helpful to double check what a good credit score is at the time you’re reading this.
- What if you don’t have a credit history?
If you don’t have a U.S. credit history then it’s time to get your identification together. Most credit-building processes will require a US Social Security number (SSN). If you don’t have an SSN you will need to visit a local Social Security office.
In order to receive an SSN as an immigrant you must be either:
- A naturalized U.S. citizen
- A refugee
- A lawfully permanent resident/green card holder
- Someone who has a U.S. work visa
If you don’t have an SSN some credit card providers may access your Individual Taxpayer Identification Number. This is a number that the IRS issues to immigrants who, while falling outside of the above categories, still work and pay taxes in the U.S.
The best options for immigrants to improve credit
The best way to start building your credit is with a credit card. If you are able to make regular on-time payments on your credit card you will demonstrate to credit bureaus that you’re a reliable credit user.
- Secured credit cards
If you have cash for a deposit then you may be able to acquire a secured credit card. By allowing the bank to hold your deposit they will allow you to use a credit card until you want to cancel or they want to upgrade you to an unsecured card.
If you have no credit history or poor credit history getting a secured credit card is one of the best options to help you improve your credit. To apply for a secured card you;ll have to apply to a specific bank. You will need a US bank account for your deposit and you will need a U.S. ID number, SSN or ITIN.
If you are a reliable user of your secured credit card then you will likely receive an unsecured credit card, with a higher credit limit, within six months to a year.
- What if you do not have a Social Security number or US credit history?
There are some companies, like Petal, that provide Visa credit cards for people who have no credit history such as immigrants. These companies will evaluate your ability to repay debts based on your bank account history. You can get a low credit limit, from a company like Petal, and start building your credit score up through reliable, recorded U.S. credit card transactions and payments.
If you’re an American Express customer in your home country you may be able to benefit from the American Express Global transfer program. You can then use your account history to support your application for an American Express Card in the U.S.
You can join the American Express Global Transfer program if you’ve been the primary cardholder on an American Express Card for at least 3 months and you have a government issued ID,(SSN, Green Card, or ITIN) a US address and a phone number.
- Should you co-sign on a credit card?
Another option to help you build your credit score is to co-sign on a credit card with a relative or friend. Co-signing means the other person will pay your debt if you default on your credit payments. Therefore it is important that you only cosign on a credit card with someone who is trustworthy and capable of repaying your debts.
The upside of co-signing is that if your friend or relative has good credit you will be able to get approved for an unsecured credit card even if you lack credit history. If you have a trusted co-signer, this route may be the quickest way for you, as an immigrant, to build your credit score.
How to send money to the U.S.
Learning about how to build and manage your credit score in the U.S. should hopefully help you support family and friends based in the U.S. If you want to start supporting your loved ones in the U.S. as soon as possible then you may want to send them some money. This is where Small World can help.
Small World is an international money transfer service that helps millions around the world send money to their loved ones. There are a number of transfer services you can make use of if you want to support your family and friends in the United States, including cash pickup and bank deposit.
Your first digital transaction is always free of transfer fees!
