Building Credit in the U.S. as an Immigrant
When someone moves to the United States as an immigrant, it helps to start building credit as soon as possible. A credit history can affect everything from renting an apartment, getting utilities turned on, qualifying for a car loan, and sometimes even employment decisions. Many immigrants arrive with no U.S. credit file at all, which can make meeting basic financial goals or acclimating to the country harder at first. This article explains realistic steps an immigrant can take to begin building credit, including options that may work without a Social Security number.
An immigrant may be able to build credit by, among other things, getting a free secured credit card, opening a bank account, using a credit builder loans and more. Some of these action of entering the US financial system, even without a SSN can be done by using an Individual Taxpayer Identification Number (ITIN). In addition to these steps, it may be a great idea to talk to a non-profit credit counselor for advice. However note that in general, immigrants and/or the unbanked are unfortunately often targeted by scammers - so please read our guide to identify and avoiding a scam.
Esta guía explica cómo los inmigrantes pueden establecer crédito en Estados Unidos mediante opciones legítimas como cuentas autorizadas, tarjetas de crédito aseguradas, préstamos para crear crédito y programas que aceptan ITIN. También se advierte sobre estafas y servicios costosos que deben evitarse.
Open a bank account
Opening a checking or savings account is often a critical and even “practical” first step after arriving in the U.S. A bank account does not directly create a credit score, but it can help an immigrant manage bills, build stability, and start a relationship with a bank or credit union - all of which will eventually help build future credit. It can also be helpful to begin forming a long term financial relationship with an institution, should you need anything from them in the future such as a mortgage, credit card, or personal loan.
You can try both a local bank or some of the national ones, such as Chase or Bank of America among many others. Some banks are more flexible than others about identification documents, and many immigrants use a passport and/or ITIN when opening a savings or check account. Having an account can also make it easier later if the same institution offers a secured card or starter credit product.
Try banking with Community-Focused Institutions. National banks often have rigid requirements. Community Development Financial Institutions (CDFIs) and local Credit Unions are often more flexible. Many CDFIs are mission-driven to help people who are "unbanked" or new to the country.
- Specialized Products: These local institutions frequently offer ITIN Loans or Starter Credit Cards specifically designed for those with a "thin" credit file. The ITN number allows you to open interest-bearing bank accounts and apply for specific credit cards and loans that report to the major bureaus.
- Holistic Review: Rather than just a computer score, these lenders may consider "alternative data," such as a history of paying rent or utility bills on time.
ITIN numbers to start a credit history can be obtained without needing to talk to a government official
Get an ITIN, which is an Individual Taxpayer Identification Number that can help build a credit profile, without stepping into a government building. If you don't have a Social Security Number, you can still build credit using an Individual Taxpayer Identification Number (ITIN). You do not have to go to the IRS or a government office to get this.
The safest way for an immigrant to get the ITIN number is to use a Certified Acceptance Agent (CAA). These are people in your own community - often at local non-profits, immigrant resource centers, or community banks - who have been authorized to help you. A CAA is safer as they can verify your identity (like looking at your passport) so you don't have to mail your original documents away or deal with a government agent directly. Ask at a local community-based organization (CBO) or a neighborhood credit union if they have a Certified Acceptance Agent who acts as an ITIN agent on staff. They are there to help you, not report you.
Become an authorized user on a trusted person’s credit card
If an immigrant has a trusted friend or family member (be wary of a scam as noted above) with a strong credit history/score, being added as an authorized user on that person’s credit card can sometimes help the immigrant begin building a credit file faster. This works best when the primary cardholder (a.k.a. the trusted friend or family member) has a long history of on-time payments and low balances. In addition, the card issuer needs to be able, and willing, to report the authorized user information (the immigrant on the account) to the credit bureaus. There is also no cost for the person with the strong credit score either, as it is free to do and it will barely (if have any) impact on their ratings.
It is not guaranteed at every bank or for every account, so it is important to confirm the card reports authorized users. For an up-to-date explanation of how authorized user status can affect credit, a website to get further details on the process is NerdWallet at https://www.nerdwallet.com/finance/learn/authorized-user-credit-score. Immigrants should avoid websites that charge large fees to “sell” authorized user placements, as this can be expensive, short-lived, and sometimes tied to scams. The process is free to do, although there are some third party websites that charge those in need hundreds or even thousands of dollars for this service (most of which may be scams or not legit).
Get a secured credit card as an immigrant and pay it on time
A secured credit card is one of the most common ways to build credit from scratch with many US banks and credit unions offering them. These will be generally much easier to get that a “standard” credit card, as that may not be an option for an immigrant. If you search around you may find free offers as well.
With a secured card, the immigrant puts down a refundable deposit, and the deposit typically becomes the credit limit. For example, a $300 deposit often creates a $300 limit. The deposit will reduce the risk to the lender and helps the lender build comfort with you. The goal is to use the card lightly and, most importantly to help build credit, is to pay the bill on time every month.
Over time, the card builds payment history, and some secured cards can later graduate to an unsecured card depending on the lender. For immigrants without an SSN, it may help to focus on secured cards that accept an ITIN, since this is a common path for newcomers. Another option, which is generally more complicated / harder, is also applying for a credit card if you do not have a social security number.
Use a credit-builder loan or credit-building account
Another great option is to use a credit-builder loan or credit-building product where your monthly payments are reported to the major credit bureaus in the US. These credit builder loans are often offered by credit unions, some banks (though not quite as common) and some fintech companies. Again, be wary of using any fintech company or lender, as this industry as well can have scam or fly by night companies in it.
In many credit builder loan models, the borrower makes monthly payments while funds are held in a savings-style account, and the borrower receives the money after payments are completed. The key benefit is that on-time payments can help create a credit history. Examples of credit-building programs that report to the major bureaus include Self Financial at https://www.self.inc/credit-builder-loan and Kikoff’s reporting approach described at https://kikoff.com/frequently-asked-questions. Any product that reports can also hurt credit if payments are missed, so immigrants should only choose a monthly amount they can comfortably afford.
Add rent payment and bill history where possible
Rent and regular household bills, such as utilities, are often an immigrant’s largest regular payments, but they usually do not appear on credit reports unless a provider reports them. Some immigrants build credit by using rent reporting programs or credit bureau tools that add certain bills. Fannie Mae and Freddie Mac now require lenders to look at rent payment history (using VantageScore 4.0 or FICO 10T). This makes rent reporting much more valuable than it used to be.
Esusu, founded in 2018 and BBB rated, states that it reports on-time rent payments to Experian, Equifax, and TransUnion at https://esusurent.com/rent-reporting. Experian Boost is another option that can add certain eligible immigrant household bill payments to an Experian credit file, which is a free feature described at https://www.experian.com/blogs/ask-experian/what-is-experian-boost/ . Immigrants should understand that this type of tool may affect only certain scoring models tied to that bureau, so it is still important to build traditional credit accounts over time.
Consider nonprofit lending circles that report to credit bureaus
Some immigrants establish credit and address other financial needs through nonprofit “lending circles,” which formalize a traditional rotating savings practice and report payments to credit bureaus. A widely cited example is Mission Asset Fund (MAF) Lending Circles, which may even provide interest free loans to some applicants. In addition the non-profit reports repayment history, including for immigrants, to all three major credit bureaus with more information on Lending Circle at https://www.missionassetfund.org/lending-circles/.
Experian also notes that both Mission Asset Fund and Esusu report payments to all three bureaus in the context of lending circles and rent reporting at https://www.experian.com/blogs/ask-experian/what-is-lending-circle/. These programs can be a good fit for immigrants who prefer community-based options and want a structured way to build a credit file.
Get help from a nonprofit credit counselor
If an immigrant is unsure which step is safest or most-effective, or if debt or budgeting issues are already present, nonprofit credit counseling can help. There are national organizations for phone consultations or online chats, and most cities also have local branches of non-profit credit counseling organizations. These organizations can help immigrants find reputable counseling, improve credit ratings and avoid predatory services.
The credit counseling service will provide the immigrant with everything from budgeting tips to information on paying off debts, applying for personal loans, employment and more. The goal is to help build financial literacy of the client (immigrant), as most people sorely lack this skill. Find a local or national non-profit credit counseling agency.
If someone specifically needs a bankruptcy-related credit counseling certificate (for a court filing), or other possible non-profits to try, the U.S. Department of Justice maintains a state-by-state list of approved agencies at https://www.justice.gov/ust/list-credit-counseling-agencies-approved-pursuant-11-usc-111.Note while this is a DOJ website, it is just a list of resources and the site has nothing to do with being an immigrant or not.
A few reminders that help immigrants build credit faster and safer
Credit building is not instantaneous and takes time as well as discipline. It usually comes down to consistent habits. Paying bills on time matters most, and keeping balances low on any credit or loan that you may eventually obtain helps as well. Also, important to know to reduce the chance of falling into a scam, an immigrant does not need to carry debt to build credit. A small monthly charge that is paid in full can build history without paying interest. It also helps to avoid applying for too many accounts at once, since multiple applications can create extra inquiries and increase denials early on.
Once you have gotten the ball rolling on your credit journey by completing these steps, all that's left to do is wait. It does take some time, and nothing happens overnight. The longer you prove that you can responsibly manage your credit, the higher your score may go.
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