Immigrants Without Credit & How To Get Some

Join the Discussion "Have you found it difficult to establish credit in the USA since you arrived?" JNLWRITER   Related Resources • Taxes and Credit    From Other Guides • Credit/Debt Mngmt • Consumer Advocacy • Frugal Living  Elsewhere on the Web • Credit Time • Establish Credit

Establishing credit is fairly vital to life in the USA, yet not that easy for new arrivals to do. This major hurdle takes some time and wise planning to overcome.

The other day one of our immigrant friends asked quite innocently how she could establish credit in the USA, and quickly. She has excellent references in France, as well as a history of paid off loans and credit cards. Now she'd like to transfer that credit history to the USA, purchase a car and rent a better home.

Unfortunately, the news we had to deliver was not great.

The USA is a major credit-oriented society. Anyone without credit is living on the fringe. You need a credit card to rent a car, a carpet cleaner, a video or most anything for that matter, and to secure reservations or order items by mail.

In many cases, even renting an apartment and ordering basic utilities requires that a credit check be run on you, so how does one go mainstream USA without credit?

A solid credit history cannot be built overnight, and a short one, no matter how good, will not be acceptable to most credit grantors. Three years is the standard minimum they are seeking. For this reason, immigrants would do well to establish good credit as quickly as possible.

How you ask? Here are some methods:

~ Find a credit card with a high annual fee and interest rate that promises to take on new members who are without credit. Be sure that no fee is charged until and unless they actually issue the card to you. You will be paying more, but the benefit of establishing credit will be worth it. Although you need to spend on the card in order to build the credit history, be very careful to keep it to a bare minimum and pay on time. You don't want to bury yourself in interest payments or to end up with bad credit because you can't pay your bills.

~ Be very selective about applying for credit. Only apply for one or two things each few months, maximum. Every time you apply for credit it shows on your report and you do not want to look desperate and like a wild spender.

~ Join a gym. As much as we hate to recommend roping yourself into a three year Bally's contract, very few gyms deny anyone, regardless of credit history, and yet you will build a good credit history if you have a contract and fulfill it. To make sure, ask your gym if they report to credit agencies, before you sign on.

~ Take out a secured loan and pay it right back. You can take your own $1000 savings or money market account and use it as collateral to get a secured loan for the same amount. In other words, you are just borrowing what you already have and then you cannot touch your money until you pay it back. A very silly system indeed since most people would prefer to avoid high interest and just use their own funds. However, taking this type of loan out and paying it back a month later will be a great feather in your credit cap.

~ Make sure not to over extend yourself, to read interest rate and fee payment information very carefully and to make sure you always pay on time. If you don't, you will develop a bad credit report and potentially do more harm than good.

~ Do your best to stay at one job and one home for as long as possible. Creditors also look for how much money you earn and how stable your life is.

After three years of carefully following these guidelines, you should have a decent credit rating and be able to get better interest rates on new cards and contracts, and a higher success rate with approval. In the meantime, before you have any credit, you can get a checking account with a bank that offers Visa or Mastercard ATM cards. Although this is not a credit card and only uses money you already have in the bank, the ATM Master or Visa card works just as well as a credit card to purchase mail order items, secure reservations, provide deposits and so on.

Welcome to America and happy credit building.

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