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How to Build Credit History as New American Immigrant
By Robert Banks
As a new immigrant arriving in America, establishing a credit history may prove daunting.
Building a solid credit history is important as good credit makes it easier to get
the most competitive interest rates on mortgages, car loans and other financing.
In America, credit history is built from scratch, regardless of how well-established
you were in your native country. There are numerous ways which you can build good
credit. First and foremost, you need to apply for a social security number (SSN)
to be able to start building your credit history. Here are some ways to start establishing
your credit history:
Rental and Utilities If you rent or own a house or apartment, put utilities in your
name (such as gas, electric, cell phone). Although it will not establish a credit
score, if you pay all your bills on time and keep an excellent record, you make a
good base for times when you need to take loans.
Open a Bank Account Open a bank savings and/or checking account and keep that account
in good standing. Fund it with regular deposits of your paycheck. Lenders will consider
this information and decide if you are a credit risk.
Keeping your account open and maintaining good standing proves you can manage money,
and this is important.
In addition, you may be able to obtain a loan through your bank in the future and
gain good credit that way. If possible, take a hard copy of your history from your
native country so lenders can verify your information. When necessary, have it translated
into English, to offer to lenders. With that information in hand, lenders may be
willing to attempt to verify information and help position you on the credit ladder.
Get a Credit Card
You do not have to be a U.S. citizen or green card holder to apply for a credit card.
You can get a secured card linked to the bank where you opened your savings account.
The bank will set aside a specified amount of money in your account and provide you
with a credit card equal to that amount. Use the card like a regular credit card,
and pay it off on time to demonstrate your credibility. However, avoid department
store cards as they less valuable in establishing credit and also carry higher rates.
Student immigrants may get a student credit card through school's credit union. Also,
use your credit card responsibly. You will be rewarded by being offered lower interest
Secured credit When you purchase a car, you are getting a secured loan. If you make
your payments on time, this is a great way to establish good credit. But if not,
the lender can repossess the purchased item to pay off your debt. If you purchased
a home and pay a mortgage, this is also secured credit and as long as you make your
payments on time, it will reflect well on your credit history. Remember establishing
good credit takes time. Be sure to make careful decisions and be patient. Do not
be afraid to request a copy of your credit report and review it carefully.
on your country of origin, some laws make it illegal for countries to reveal credit
information to banks or other lenders with other countries. So even if you have excellent
credit from your native country, it may be difficult to see that credit transferred
to the U.S. In America, it is a violation of federal law for lenders and credit card
companies to consider race, national origin, religion, and gender when deciding to
grant credit. When you decide to take a loan, be sure to borrow from a reputable
bank or lender.
Educate yourself by doing your own research at your local library
or Internet. And regardless of your appearance, language or culture, a new credit
history in America can be built up with patience and the right steps.