It is difficult and frustrating to build a credit history in US if you are an immigrant. The three CRAs namely: Equifax, Experian and TransUnion, are the major credit reporting agencies in US. They aren’t Government Organizations and they do not share information with each other, which means that they are in competition with each other.
If you do have a credit history in your home country, you won’t be able to transfer that to the CRAs in US, because they won’t accept information from other overseas countries due to some legal/privacy issues. So, this means you’ll have to start from the very beginning.
Here are some tips which will make this process easier:
1. Obtain a Social Security Number
First of all, you’ll need a Social Security Number for establishing a credit in US. In the past, International Taxpayer Identification Number (ITIN) would have been useful, but they are no longer compatible with CRAs system. An address in United States will also be required to fill in the credit applications.
CRAs can definitely create an account without Social Security Number by matching your other identifying information but you’ll have to bear its consequences afterwords.
A SSN is important, as most of the lenders will require the number in order to check your credit report when you apply. It might be possible that you get credit without the number, but the reference of that credit won’t show up in your credit report.
2. Getting the Credit
Credit reports in US contain all of the negative and positive information of how you’ve handled the credit. Officially the history starts building when you get a credit from the lender, who reports to your account and provide payment reports to one or all of the CRAs.
3. Secured Loans
There are several ways to get an account in which first is to find out whether the bank or financial institution where you hold your account offers you a secured loan with which you can leave money in your deposit account with the financial institution as a collateral for your loan. This approach will work only if the loan is reported to CRAs.
4. Secured Credit Cards
You can also get a secured credit card instead of loan, which requires a security deposit. These cards are different from prepaid cards. A prepaid card allows you to load and spend money, they do not report to credit reporting agencies nor do they help build a credit history.
For the use of secured credit cards you must shop around a little and you can also take help from banks regarding establishing yourself in US.
5. US Based Credit Cards
If you have issues with a credit card company, which also issues cards in US, then you must find out some other way of getting US-based credit cards.
6. A Co-signer
The fourth option that you have is to get a co-signer, who already holds an established credit history in US. You can ask them to co-sign an account for you. They might refuse to sign the account for you because if you will default, your co-signer will be liable to pay the amount. The late payments will affect his credit as well as yours if you are late for payments or have missed any. In case of missing payments, they will be reported for seven years in your credit history, so, make sure you pay on time every month.
To build strong history you’ll need to have a positive credit payment history. The most essential part is to use the credit, if you want to build a good credit history. If you get a secured credit card you’ll have to use it in order to keep it active and to improve your history.
It will take some time to build a credit history and for that you’ll have to wait. According to a saying; “Slow and steady wins the race”. Your credit scores are also calculated on the basis of how long you’ve had your credit accounts.
