Establishing Credit as a New Immigrant to the US
If you've recently relocated to the United States, your financial history doesn't transfer with you. While this can be a fresh start for some, it also presents challenges. Without a US credit history, you may find it difficult to rent an apartment, buy a car, or even secure a cell phone plan. Establishing credit is essential for making major purchases that require loans.
Even if you had excellent credit in your home country, US credit reports only reflect financial activity with US lenders. While some lenders may consider your foreign credit history, most will require you to build a new credit record from scratch. Fortunately, with a little effort, immigrants can establish good credit in just a few months.
Understanding Credit in the US
What is Credit and Why Does it Matter?
Credit is a financial record that helps lenders determine how reliable you are when borrowing money. It plays a crucial role in securing loans for homes, cars, and even everyday expenses like phone plans. A strong credit score signals to lenders that you are responsible with payments, making it easier to get approved for loans with better interest rates.
The three major credit bureaus in the US Equifax, Experian, and TransUnion collect and track your credit information. When you open a credit account, lenders report your payment history, outstanding balances, and account activity to these bureaus. This data is used to generate a credit score, a number that reflects your financial trustworthiness.
Credit Scores
Credit scores range from 300 to 850, with 700 and above considered good. The most commonly used scoring model is the FICO score. Without a credit history, you won’t have a credit score, making it harder to qualify for loans. However, you can start building credit quickly by following key steps.
No Credit vs. Bad Credit
Having no credit history is different from having bad credit. No credit means lenders lack information about your financial behavior. Bad credit, on the other hand, results from missed or late payments, making lenders hesitant to extend credit. While bad credit can take years to repair, new immigrants can build a credit history relatively quickly.
How to Transfer Credit History from Your Home Country
Building credit in the US takes time, but some services, such as Nova Credit, help transfer credit history from select countries. Nova Credit partners with global credit bureaus to convert foreign credit reports into US equivalent credit files, which lenders, landlords, and financial institutions may accept.
Countries supported by Nova Credit include Mexico, India, Australia, the United Kingdom, and others. If eligible, you can use this service to apply for loans, rental agreements, and other financial products in the US
To get started, visit the Nova Credit marketplace and explore options for student loans, car loans, apartment rentals, and more.
Transferring Credit from an ITIN to an SSN
If you initially used an ITIN but later obtain an SSN, you must manually transfer your credit history. Follow these steps:
Write a Letter to Credit Bureaus – Request a transfer of your credit history from your ITIN to your SSN. Send this request to:
· Equifax – P.O. Box 740241, Atlanta, GA 30374
· Experian – P.O. Box 2002, Allen, TX 75013
· TransUnion – P.O. Box 1000, Chester, PA 19022
Include Supporting Documents – Attach copies of your ITIN, SSN, work authorization, and a utility bill or bank statement for verification.
Check Your Updated Credit Reports – After 2-4 weeks, confirm that your credit history has been transferred correctly.
Steps to Building Credit as an Immigrant
1. Apply for a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
A Social Security Number (SSN) is a nine-digit identifier issued by the Social Security Administration (SSA). It is essential for employment, government benefits, and financial activities such as opening bank accounts and applying for credit cards.
If you’re not eligible for an SSN, you can apply for an Individual Taxpayer Identification Number (ITIN). Some lenders and credit card issuers accept ITINs for credit applications.
2. Open a US Bank Account Early
Establishing a relationship with a US bank can help in getting pre approved for future credit products and qualifying for better credit card options once you have some account history.
3. Get Added as an Authorized User
If you have a family member or close contact in the US, ask them to add you as an authorized user on their credit card. This lets their positive payment history appear on your report. Choose someone with low utilization and long credit history.
4. Take Advantage of International Credit Cards
We recommend obtaining an American Express credit card in your home country and using it for 6-12 months prior to relocating. Amex is one of the only credit card companies that recognizes a credit score internationally and make it easier to obtain a credit card once you relocate to the US.
There are other options that provide credit cards specifically for building credit, such as Discover.
Without this, it can take up to 2 years to build up a credit score, and typically credit bureaus require 6 months’ worth of usage to be considered.
5. Use Alternative Credit Services
Consider services that report rent, utilities, and subscriptions (like Netflix) to credit bureaus: Experian Boost, Rent Track and Level Credit. This is especially useful if you’re not using credit cards much but want to show consistent payment behavior.
6. Open a Secured Credit Card
Without a credit history, getting a standard credit card can be challenging. A secured credit card helps you build credit by requiring a refundable deposit, which typically becomes your credit limit. By using the card responsibly and making on-time payments, you establish a positive credit history.
7. Apply for a Credit-Builder Loan
A credit-builder loan works by depositing a small loan amount into a secured savings account. You make monthly payments, and once the loan is paid off, you receive the money. This not only builds your savings but also establishes your credit history.
8. Use Credit Responsibly
Once you open a credit account, follow these best practices:
· Make payments on time – Late payments hurt your credit score. Set up automatic payments or reminders.
· Keep credit utilization low – Use no more than 30% of your available credit limit to maintain a strong score. For example, if your limit is $300, try to keep your balance under $100.
· Maintain long-term accounts – The longer you keep an account open, the better it reflects on your credit history.
9. Monitor Your Credit Score and Report
You are entitled to a free credit report from each of the three major bureaus once a year at annualcreditreport.com. Regularly reviewing your credit report helps you identify and correct errors that could impact your score.
Conclusion
Establishing US credit is a critical step for new immigrants, impacting everything from housing to major loans. Though foreign credit history often doesn't transfer directly (with potential exceptions via services like Nova Credit), building a new profile is manageable. Key actions include getting an SSN or ITIN, opening starter credit products like secured cards or credit builder loans, and diligently managing these accounts through on-time payments and low utilization. Regularly checking your credit reports ensures accuracy and progress. By following these guidelines, newcomers can effectively navigate the US credit system and build a strong financial foundation.
At In2America many of us have relocated and we've advised people for a decade on how to navigate this issue if you need help reach out and we'll guide you through the challenges. If you navigate the system efficiently it takes about 2 years to get your credit rating to a good level so it needs attention immediately.