Immigrants Can Ease Transition With Less Debt & Higher FICO Scores4 min read
A Social Security Number Is Important
To build or improve your credit, you’ll often need a social security number. Social security numbers are essentially 9 digit numbers that are assigned to residents of the United States. It’s important when talking about credit, because this number is generally used to track your reliability in financial situations.
Anytime a company is trusting in your financial dependability, 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.
Getting a social security number as an immigrant can be a complicated process, and in some cases very difficult. Generally, you can apply for a social security card if you’re approved for an immigrant visa. This, in turn, will give you the qualifications you need to start building credit. If you’re unable to secure a social security number, consider looking into other options, such as obtaining an individual taxpayer identification number from the IRS. This will also serve to help you get the credit you need.
Consider Working with a Credit Repair Agency
There are a number of organizations that offer free advice on credit repair to new immigrants. Reputable credit repair companies such as Pyramid Credit are staffed with experts in financial matters – especially related to credit – specializing in clients with either no credit history or poor credit.
Getting the initial opportunity to build credit, or recovering from financial mistakes in your past, can oftentimes be a difficult task. Taking advantage of these credit repair agencies for 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’s a limited amount you’re going to be able to do to start – even with the help of a quality credit repair agency. Expect to spend months or even years slowly building up a credit history before you’re able to make any large purchases. It’s a slow and steady process, but with commitment and financial responsibility, you’ll start to see your efforts pay off.
Realistically, however, you’re going to need a quick way to gain some basic credit if you want to find a good place to live. Some places will let you prepay ahead for several months of rent. If that’s not an option or you just don’t have the funds, you’ll need good enough credit to make your landlord or bank confident in your ability to pay.
The sections below deal with how to establish or repair credit as an immigrant, and assumes you’ll be starting from the very beginning with no ability to secure loans or credit cards.
Look for a Secured Card
Many banks will now issue a secured credit card to individuals with poor or nonexistent credit. These cards function differently from a regular credit card and have reduced risk associated with use for the loaning bank. Basically, every time a bank gives out a credit card or loan, they’re taking on a risk that the money won’t be paid back. Managing that risk is important for these companies to stay in business, so they often avoid dealing with customers who have low or new credit.
A secured credit card offers a card with a low spending limit. The “secured” part means that users have to transfer enough cash to cover their spending limit before they’re authorized to use the card. Basically, this means that the credit you’re using is already covered by the money you’ve paid to the bank. Essentially, there’s zero risk for 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.
Being approved for the first credit card is difficult. However, once you’ve jumped through that hoop and have started building your credit by spending responsibly, you’ll find the rest of the process will be a lot easier.
Secure Your First Real Credit Card or Loan
When you’ve built up some good credit from regular use of the secured card, it’s time to apply for another credit card or a loan. There’s only so much that a secured card can do for your credit, and you’ll need more lines of credit in order to continuously increase your score.
Apply for a credit card or loan that you feel you may have a good chance of being approved for. Do some research online on good beginning 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 credit line. Then enjoy the increased flexibility and options that a good credit score will give you.
Keep on Moving Forward
These steps encompass only the first parts to a process that will span your entire life while you’re living in the United States. As long as you’re relying on credit for some portion of your lifestyle, you’ll need to maintain the good credit score you’ve worked so hard to establish. Continually make wise decisions, spend responsibly, and keep in contact with the expert staff at the credit repair company to make sure you’re still on the right track.
Immigration and establishing a life in your new home is a difficult process, however, following these guidelines will allow you to be one step closer to financial security with access to the resources you will need to prosper.