A social security number is important
To build or improve your credit, you will often need a social security number. Social security numbers are essentially 9-digit numbers that are assigned to residents of the United States. It is important when talking about credit, because this number is generally used to track your trustworthiness in financial situations.
Anytime a business is confident in your financial reliability, whether it’s renting an apartment or buying a car, a good credit score can be a determining factor in deciding whether or not to do business with you.
Obtaining 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 are approved for an immigrant visa. This, in turn, will give you the scores you need to start building credit. If you are unable to obtain a social security number, consider looking at other options, such as obtaining an individual taxpayer identification number from the IRS. This will also help you get the credit you need.
Consider working with a credit repair agency
There are a number of organizations that offer free credit repair counseling to new immigrants. Reputable credit repair companies, like Pyramid Credit, have experts in financial matters, especially those related to credit, who specialize in clients with no credit history or bad credit.
Getting the initial opportunity to build credit or recover from financial mistakes in your past can often be a difficult task. Taking advantage of these credit repair agencies at no additional charge is a great way to get advice and guidance on how to build credit without adding additional debt.
Keep your expectations realistic
As a person with no credit, and especially as someone new to the country, there is a limited amount you can do to get started, even with the help of a quality credit repair agency. Expect to spend months or even years slowly building a credit history before you can make any major purchases. It is a slow and steady process, but with commitment and financial responsibility, you will begin to see your efforts pay off.
However, realistically, you will need a quick way to get basic credit if you want to find a good place to live. Some places will allow you to prepay several months of rent. If that’s not an option or you just don’t have the funds, you’ll need good enough credit for the homeowner or bank to trust in your ability to pay.
The sections below discuss how to establish or repair credit as an immigrant, and assume that you will start all over without the ability to obtain loans or credit cards.
Look for a secured card
Many banks will now issue a secured credit card to people with poor or no credit. These cards work differently than a regular credit card and have a reduced risk associated with use to the lending bank. Basically, every time a bank grants a credit card or a loan, it risks that the money will not be returned. Managing that risk is important for these companies to stay in business, which is why they often avoid dealing with customers who have new or low 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 are authorized to use the card. Basically, this means that the credit you are using is already covered by the money you paid to the bank. Basically, there is no risk to the lender, even if you do not make the 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.
Getting approved for the first credit card is difficult. However, once you’ve gotten past that hoop and started building your credit by spending responsibly, you’ll find that the rest of the process will be a lot easier.
Secure your first real loan or credit card
When you’ve built up good credit through regular use of your secured card, it’s time to apply for another credit card or loan. There is much a secured card can do for your credit, and you will need more lines of credit to continually increase your score.
Apply for a credit card or loan that you think has a good chance of being approved. Do some research online about beginner 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 line of credit. Then enjoy more flexibility and options that will give you a good credit score.
Keep moving forward
These steps cover only the first parts of a process that will span your entire life while you live in the United States. As long as you rely on credit for part of your lifestyle, you will need to maintain the good credit score that you have worked so hard to establish. Continually make the right decisions, spend responsibly, and stay in touch with the knowledgeable 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 thrive.