Immigrants can ease the transition with less debt and higher FICO scores
A social security number is important
To build or improve your credit, you will often need a social security number. Social Security Numbers are essentially 9-digit numbers that are assigned to residents of the United States. It is important when talking about credit, because this number is usually used to track your trustworthiness in financial situations.
Whenever a company relies on your financial reliability, whether it’s renting an apartment or buying a car, a good credit score can be a determining factor in whether or not they decide to do business with you.
Obtaining a social security number as an immigrant can be a complicated and, in some cases, very difficult process. In general, you can apply for a social security card if you are approved for an immigrant visa. This, in turn, will give you the qualifications you need to start building credit. If you can’t get a social security number, consider looking into other options, such as getting an individual taxpayer identification number from the IRS. This will also help you get the credit you need.
Consider working with a credit repair agency
There are a number of organizations that offer free credit repair advice to new immigrants. Reputable credit repair companies, such as Pyramid Credit, have experts in financial matters, especially credit, who specialize in clients with no or poor credit history.
Getting the initial opportunity to build credit, or recover from past financial mistakes, can often be a difficult task. Taking advantage of these credit repair agencies at no additional charge is a great way to get advice and guidance on building credit without adding additional debt.
Keep your expectations realistic
As a person with no credit, and especially as someone new to the country, there is only so much you can do to get started, even with the help of a quality credit repair agency. Expect to spend months or even years slowly building a credit history before you can make any big purchases. It’s a slow and steady process, but with commitment and financial responsibility, you’ll start to see your efforts pay off.
Realistically, though, you’ll need a quick way to get basic credit if you want to find a good place to live. Some places will allow you to pay several months of rent in advance. If that’s not an option or you just don’t have the funds, you’ll need good enough credit for the landlord or bank to trust your ability to pay.
The sections below deal with how to establish or repair credit as an immigrant, and it is assumed that you will start from the beginning with no ability to obtain loans or credit cards.
Find a secured card
Many banks will now issue a secured credit card to people with poor or no credit. These cards work differently than a regular credit card and have a reduced risk associated with use for the lending bank. Basically, every time a bank grants a credit card or a loan, they run the risk that the money will not be paid back. Managing that risk is important for these companies to stay in business, so they often avoid dealing with customers who have new or low credit.
A secured credit card offers a card with a low spending limit. The “secure” part means users must transfer enough cash to cover their spending limit before they’re authorized to use the card. Basically, this means that the credit you are using is already covered by the money you have paid to the bank. Essentially, there is no risk to the lender, even if you miss payments. Spending a small amount of money on a secured credit card each month and paying it off in full is a great way to slowly start building your credit.
Getting approved for your first credit card is tough. However, once you’ve jumped through that hoop and started building your credit by spending responsibly, you’ll find the rest of the process much easier.
Secure your first real credit card or loan
When you’ve built up good credit through regular use of the secured card, it’s time to apply for another credit card or a loan. There’s not much a secured card can do for your credit, and you’ll need more lines of credit to continually increase your score.
Apply for a credit card or loan that you think may have a good chance of being approved. Do some research online about good starter credit cards or banks that offer loans for customers with average credit, and make the decision to add another line of credit to your history. Continue making payments on both your secured card and the new line of credit. Then enjoy the added flexibility and options that a good credit score will give you.
keep going
These steps cover only the first parts of a process that will span your entire life while living in the United States. As long as you rely on credit for part of your lifestyle, you’ll need to maintain the good credit score you’ve worked so hard to establish. Make wise decisions all the time, spend responsibly, and stay in touch with your credit repair company’s knowledgeable staff to make sure you’re on the right track.
Immigrating and establishing a life in your new home is a difficult process, however, following these guidelines will put you one step closer to financial security with access to the resources you’ll need to thrive.
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