How to build credit in the U.S.
Knowing how to build your credit score is crucial when you're moving to the US. Good options for establishing credit in the United States are to transfer your credit score from your home country, applying for secured credit cards and others.
If you recently moved to the United States, either for school, work, or family, you will face all the joys but also the tribulations of relocation. One of the biggest frustrations is figuring out how to get a U.S. credit history. This can prevent you from getting access to housing, credit cards, loans and even employment.
Building a U.S. credit history is important to set up your life in your new home country, but what’s the best way to build credit quickly? Without having built credit or a credit history, you might be charged a high security deposit upfront for a rental or, even worse, be rejected.
Important note on how to establish credit in the U.S.: You don't need a Social Security Number to get approved for a U.S. credit card and start building your credit history in the U.S.. Experian and TransUnion will track and attempt to match your name, birth date, and address to your credit history.
However, specified personal information like an SSN and ITIN make it easier for credit bureaus to report information accurately. You don't need a Social Security Number to establish US credit history. Experian and TransUnion will track and attempt to match your name, birth date, and address to your credit history. However, specified personal information like an SSN and ITIN make it easier for credit bureaus to report information accurately.
As you think through the quickest way to build credit and eventually maintain a good credit history, this guide will help you with practical steps to get started.
Here are five ways to establish good credit if youhaverecently moved to the U.S. and do not yet have a credit history:
Use your foreign credit history in the U.S.
Apply for a secured credit card
Establish a relationship with a U.S. bank
Apply for U.S. credit with a co-signer
Pay on time, monitor and change product, and be patient
1. Use your foreign credit history in the U.S.
Although there are different ways to build credit in the United States, you might be able to use your existing credit from abroad in the U.S using Nova Credit. With your consent, Nova Credit can translate your foreign credit data into a U.S. format.
While your credit history won’t be transferred to national bureau databases, Nova Credit partners with companies to include information from your Credit Passport in application processes to make it easier for newcomers to get approved for credit cards, loans and other products.
Once you establish a U.S. credit account using the credit you’ve earned abroad, you can start learning how to build a local credit history in the US. Nova Credit currently connects to credit bureaus in Australia, Brazil, Canada, India, Mexico, Nigeria, South Korea and the UK. Spoiler: American Express, a Nova Credit partner, accepts foreign credit history on all their credit cards.
Use your foreign credit history to start your U.S credit history
New to the U.S.? Check if you can use your country's credit history in the U.S. to apply for credit cards and start your U.S credit history using Nova Credit. No SSN is needed to start your U.S credit history.
2. Apply for a secured credit card
One way to get started with building U.S. credit is by using a credit card to prove your creditworthiness. If you cannot transfer your global credit through Nova Credit, consider applying for a secured credit card to help build your American credit score. These cards require you to put down a cash deposit at your bank account or credit union. Your spending limit is generally the amount that you have deposited.
Important: Make sure that the issuers of your secured card report your payment history to at least one of the three major US credit bureaus, Equifax, Experian or TransUnion. If they don’t disclose this information on their websites, you can reach out to their customer support team for clarification. Unless your payment history is reported, the secured card won’t help you build a U.S. credit score.
Discover doesn’t have as much of an international presence as Visa, Mastercard, or American Express, but most major retailers and online stores will accept it in the U.S. Discover® it Secured is a secured credit card, a type of card that’s created for people who have a poor or no credit history and want to know how to build or rebuild their credit. Secured cards work just like unsecured cards, but require a refundable security deposit when you open the account.
What the card offers: The Discover® it Secured Card is one of the few secured cards that’s part of a rewards program. You can earn 2 percent cash back on your first $1,000 worth of combined purchases at gas stations and restaurants each quarter, and earn 1 percent cash back on all other purchases. Discover will also double your cash back earnings at the end of the first year.
The card doesn’t have an annual fee or foreign transaction fee. Discover also reports your payments to all three major credit bureaus and can send you a free FICO® Score based on your TransUnion credit report with your monthly statement, allowing you to track your credit score over time.
You’ll also need a bank account and Social Security number to apply. You may be able (and required) to get a Social Security number if you’re eligible to work at your university or off-campus with the school’s approval. This will be a great step in how to establish credit scores in the United States.
As with other rewards and secured credit cards, the Discover® it Secured Card has a high APR, which can make revolving a balance especially expensive.
Although lenders like Discover often request a Social Security Number (SSN), they will also accept an Individual Taxpayer Identification Number (ITIN) as well. Some banks may accept a passport, a state-issued photo I.D, or a driver's license for identification, although you typically have to do this in person.
Look out for banks or credit unions that can accept multiple forms of documentation for immigrants. Stopping by a local bank branch and explaining your situation can sometimes be more effective than applying online because bank agents can often easily check whether or not they can pre-approve you for a card in person.
3. Establish a relationship with a bank through a savings or checking account
Opening a checking or savings account with a bank may help you build your credit history so that you can get a credit card or loan with that financial institution down the road. As you build a relationship with the bank early on, you start signaling financial stability.
Before selecting a bank or credit union, consider your priorities. Does it have accessible ATMs? Does it have good customer service? What about monthly or annual fees?
Important: After you open a checking account, you should be careful to not overdraw as this will negatively impact your US credit report.
4. Apply for U.S. credit with a co-signer
One other way to make it easier to get a new credit product is to apply with a co-signer who already has gone through the process of establishing credit in the US. When you list someone with an established U.S. credit footprint as part of your credit application, you can benefit from their good credit history.
Before applying, however, make sure your co-signer knows what he or she is getting into -- a co-signer agrees to be responsible for your debt if you don’t pay your bills. Research co-signer options when you apply for different credit cards or loans.
5. Pay on time, monitor and change products, and be patient
You’ll officially begin building credit in the US as soon as you have a credit product (credit card, student loan, mortgage, etc.) that is being reported to the major U.S. credit bureaus. Make your payments on time to demonstrate your creditworthiness and build a good credit history. Rent reporting may also affect your credit score, so making sure your monthly rent payments are on time may be important to establishing a good credit score.
If you have a credit card, aim to generally use it at least once a month to demonstrate that you know how to use credit responsibly over time. Another important factor in your credit score is your credit card utilization: a good rule of thumb is to not use more than 10% of your limit.
Be sure to also check your payment due date so you don't miss a bill. Many providers will let you set up an automatic recurring payment from your checking account to ensure that you don't fall behind.
After a few months of on-time payments, you are now logged in the U.S. credit system, which will make it easier for you to get approved for another credit product. This could mean that after a few months of making on-time payments on your secured card, you will become eligible for a credit card that doesn’t require a security deposit.
Check your credit score regularly and look at credit card offers with a higher credit limit, as these result in improved credit scores as well. To help monitor your credit and explore other products, you can use the free credit score and monitoring tools from Credit Karma or NerdWallet (among others).
Keep in mind that it can take multiple years to get back to the credit score in the US that you had in your home country. It takes patience and close monitoring to build credit in the U.S.
You need credit to build credit and navigating the complexities of credit reporting aren't simple. Credit products typically come with interest fees or other costs. Lots of creditors, including credit card companies, might offer low introductory rates on products with rates that can then increase substantially after a few months.
You may be able to apply for credit products in the U.S. via Nova Credit using your foreign credit history if you have a credit history abroad. If you can't use our service, you should explore various methods of building credit from scratch from applying for a secured card to finding a co-signer or establishing a relationship with a bank. Invest time in smart credit and savings products and be diligent in monitoring your score. Good luck on your journey!
Put your foreign credit score to work in the United States
Check if you're eligible to use your foreign credit history to apply for a U.S. credit card, even without an SSN.
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