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Whether you’re in the U.S. temporarily as a student or employee, or live in the country permanently but aren’t yet a citizen, it may be a good idea to establish a credit history so you can get a credit score.
Having a credit score becomes important when you’re looking for a loan, credit card, housing or, in some cases, even a job.
Your credit scores depend on the information in your credit reports, such as your history of repaying loans or credit card bills. If you want to build your credit, you need to get an account that will report your payments to at least one of the three major consumer credit bureaus — TransUnion®, Equifax® and Experian®.
It may take time, but by following these tips for getting started, you can begin to build your U.S. credit history:
Before you start: Consider getting an ITIN or SSN
The credit bureaus can create credit reports using your personal identifying information, such as your name and address. Technically, you don’t need a Social Security number (or SSN) to build credit. Even so, getting an SSN can be a helpful first step because some financial institutions ask for it when you apply for a loan, credit card or try to open a bank account.
The U.S. Social Security Administration has eligibility guidelines for noncitizens. Generally, to get an SSN you’ll need to be authorized to work in the U.S. by the Department of Homeland Security. Applying for a number is free.
If you don’t qualify for an SSN, you might be able to get an Individual Taxpayer Identification Number. The credit bureaus don’t use your ITIN as an identifier, but you may be able to use it to apply for a line of credit.
Alternatively, some credit card issuers let you apply for a credit card with your passport or other government-issued ID.Read more: How to apply for a credit card without a Social Security number
Some credit cards may be difficult to qualify for since you don’t already have credit. But one type of card that could help you establish a positive payment history is a secured card, such as the Capital One® Secured Mastercard®.
Secured credit cards are a type of credit card designed for people who are building or rebuilding their credit. They require an initial security deposit in case you default. But if you make on-time payments and pay off your balance in full each billing cycle, your secured card can help you build up your credit.
Another option is a credit-builder loan, also known as a secured loan. This also requires an initial security deposit that serves as collateral.
If you have a close friend or relative in the U.S., you may want to consider asking that person to add you as an authorized user on one of their credit cards.
Why? Being an authorized user can positively affect factors that go into your credit score like payment history, age of credit history and number of total accounts.
Credit card accounts you’re authorized on will usually show up on your credit reports. Ask the credit card issuer if it reports authorized user accounts to the credit bureaus, since not all do.Keep reading: What you should know about being an authorized user on a credit card
Becoming an authorized user is a relatively easy and effective way to build credit, but it’s important to know that if the account does show up on your credit reports, your credit can be negatively impacted if the main cardholder misses a payment or has a high credit utilization ratio.
If you’re paying bills — such as cellphone, cable TV or even your rent — you’re building up a payment history. This information is often not reported to the credit bureaus, but you can call your service providers and ask for it to be reported to the credit bureaus.
To get your rent payments reported, services such as RentTrack will report your payment history to the three major credit bureaus for a fee.
But remember: Make sure to pay all your bills on time. Your payment history is a major influencer when it comes to your credit scores.
You might have to jump through a few extra hoops if you’re an immigrant who wants to build credit in the U.S. However, even if it takes some time, it is possible.Still confused about credit? Let's fix that