Tens of thousands of individuals arrive in the United States each year on student and work visas. Many of these newcomers hope to build a life in the country, and having good credit is an integral aspect of being successful in the U.S. in the long term. It is why building your credit history should begin from the first few months of your arrival in the country. Below is our guide on how to build your credit history as a newcomer in the U.S.
Why Is Credit Important
Credit is a vital aspect of life in the U.S., as financial institutions use your credit score to determine whether you are worth the risk. Perhaps you are applying for a car or home loan. The bank would look at your credit score and other factors to determine your eligibility and interest rate.
Even attempting to get an apartment is a challenge if you have no to low credit, as landlords view those with a poor credit score as risky tenants.
It is not only when you are applying for loans that credit scores matter. Even attempting to get an apartment is a challenge if you have no to low credit, as landlords view those with a poor credit score as risky tenants.
Starter Credit Cards
There are many kinds of starter credit cards available to individuals who do not have a credit history. Many financial institutions are happy to provide credit cards with small credit lines to college students.
If you have recently arrived in the U.S. for undergraduate or graduate school, you may want to ask around at your institution about any available credit cards for international students. One or two card companies may send representatives to campus early in the semester to make it easy for applicants to sign up for a card.
Those who are in the U.S. for work may find it even easier to get a starter card with a higher credit line. There are many different credit cards available to individuals with no to low credit. Leverage the work done by companies like Nova Credit that specialize in providing credit services to newcomers to the U.S. before making a final decision, though
If you have no credit history, you can use your bank information and income as proof that you are worth the risk. Companies such as Petal, which offers the Petal Cash Back Visa Card, can take bank information into account if you have no credit history. You can get anywhere from $500 to $10,000 credit lines, but those who have no credit score are likely to be on the low end of that spectrum.
Another option is to go for secured credit cards, which require you to make a $50 to $200 deposit to earn a $200 to $300 credit line. When you make four or five monthly payments on time, you are eligible to increase the credit line and eventually upgrade to a regular credit card with the same provider.
Financial Mishaps to Avoid
Newcomers to the U.S. should keep in mind that starting with no credit score may be inconvenient, but it is better than having very poor credit. Those who have poor credit have made financial mistakes, such as not paying off their debts or being very late to pay bills.
Do not let your credit score go down by ensuring that you are always paying your bills on time. It includes your rent, utility bills, and any other monthly payments. Try to pay off the entire balance on your credit card each month. If you must leave a balance, try to transfer it onto a new credit card that has a 0% APR for balance transfers.
Progressing to Better Credit Cards
While you may have to start with secured or low-end credit cards, you can soon become eligible for better options. It only takes six to twelve months of consistently making payments on your cards before you may find your credit score is high enough to apply for cards with better terms.
It is vital to ensure that you are not adding excessive balance to any of these credit cards, unless it is a card that has a 0% intro APR offer. Having three to five different credit cards helps earn the best rewards and quickly improve your credit score, but it is only financially prudent when you are not paying interest on any of your spending.
Arriving in the U.S. with no credit history has its advantages. You have a clean slate, and so long as you make prudent financial decisions, you can build up your credit score in no time.