September 22, 2021

tacere

Beauty Made Perfect

How Do New Immigrants Build Credit in the U.S.?

Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

When new immigrants arrive in the U.S., they may have a difficult time securing a mortgage, a credit card or even renting an apartment. The credit score they had in their home countries typically won’t follow them to the U.S. because different countries use different methods for determining an individual’s credit worthiness.

Without a U.S. credit score, new immigrants typically struggle to access financial products available to those with long credit histories or who were authorized users on a friend or family member’s credit card.

Since a good credit score can give you access to better interest rates on a mortgage or better terms on your credit card, it’s essential to start building your credit score in the U.S. as soon as you can.

Ahead, Select explores some of the ways new immigrants to the U.S. can secure a credit card or start building their credit score when they have no credit history.

Cards you can get with a Social Security number

For starters, getting a credit card, paying your bills on time and in full and keeping your credit utilization ratio low are some essential ways to start building your credit history. However, new immigrants often face difficulty with the first step: signing up for their first credit card.

Depending on what type of identification new immigrants have, there are a few types of credit cards available to them. Most cards require that you have a Social Security number (and some require you to be a U.S. citizen), so your options will be more limited if you don’t have one. 

If you have an SSN, you could be eligible for a secured credit card. A secured credit card requires that cardholders put down a deposit, which acts as collateral in case of default, that’s equal to the credit limit. 

The Citi® Secured Mastercard® is one option available to immigrants who have an SSN or an ITIN (more on that below). This card makes Select’s list of best secured credit cards, because it allows you to take on a higher credit limit than your deposit, which can help you build your credit score. With the Citi Secured Mastercard, you can put down a deposit of $49 and get a credit line of $200. You’ll also be able to set your payment date so you can choose which time of the month is best for you to pay your bill. One drawback of this card is the lack of welcome bonus or rewards, but it’s not a bad choice if you’re not eligible for other secured cards.

Citi® Secured Mastercard®

  • Rewards

    This card doesn’t offer cash back, points or miles

  • Welcome bonus

  • Annual fee

  • Intro APR

    N/A for purchases and balance transfers

  • Regular APR

    22.49% variable on purchases and balance transfers

  • Balance transfer fee

    $5 or 3% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

  • Credit needed

Pros

  • No annual fee
  • $200 refundable deposit
  • Flexibility to change your payment due date

Cons

  • No rewards program
  • 3% foreign transaction fee

What if you don’t have a Social Security number?

If you don’t have an SSN, you can use an individual taxpayer identification number (ITIN) to qualify for some credit cards. An ITIN is a form of identification issued by the IRS to foreign nationals for tax-paying purposes. Petal has two cards that are available to immigrants who don’t have an SSN: the Petal® 1 “No Annual Fee” Visa® Credit Card and the Petal® 2 “Cash Back, No Fees” Visa® Credit Card. 

Both cards consider factors beyond your credit score when deciding if an applicant is eligible. When you apply, the issuer looks at your ‘Cash Score’ by analyzing your banking history, proof of income and on-time bill payments. If you sign up for a Petal 2 Card, the issuer will consider your credit score if you have one. The Petal 1 Card doesn’t have a cash-back rewards program, but the Petal 2 Card gives cardholders 1% cash back on all eligible purchases and then up to 1.5% back after 12 on-time monthly payments. 

The Deserve® EDU Mastercard for Students is a good choice if you’re an international student without an SSN — you’ll need to be enrolled in college, have a U.S. bank account and be above the age of 18. The Deserve card also doesn’t have any foreign transaction fees, which makes it a solid option for international students planning to spend time abroad. 

Deserve® EDU Mastercard for Students

  • Rewards

    1% cash back on all purchases

  • Welcome bonus

  • Annual fee

  • Intro APR

  • Regular APR

  • Balance transfer fee

    N/A, balance transfers are not available

  • Foreign transaction fee

  • Credit needed

Another option is the Capital One® Secured Mastercard. Much like the Citi Secured Mastercard, the Capital One Secured Mastercard, qualifying applicants can put down a deposit that’s less than their credit limit. You also won’t earn a welcome bonus or any rewards with this card. Cardholders can graduate to an unsecured card, but there’s no timeline for how long it can take.

Capital One® Secured Mastercard®

Information about the Capital One® Secured Mastercard® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.

  • Rewards

    This card doesn’t offer cash back, points or miles

  • Welcome bonus

  • Annual fee

  • Intro APR

    N/A for purchases and balance transfers

  • Regular APR

    26.99% variable on purchases and balance transfers

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

What if you have a good credit history in your home country?

New immigrants from Australia, Brazil, Canada, India, Mexico, Nigeria, South Korea and the UK might want to consider the program Nova Credit, which can translate the credit score that immigrants had in their home country to a U.S. credit rating through its Credit Passport® service.

Misha Esipov, the CEO of Nova Credit, first founded the company with two other grad students, at Stanford in 2015 when he saw international students struggling to secure a student loan or sign up for a credit card.

“Immigration is an incredibly vulnerable period of transition — you have to learn a new language, retrain professionally, adapt to a new culture — all in an environment where you don’t have the same social safety net you had in your home country,” says Esipov. “And it is precisely during this period of transition that the banking sector is inaccessible to millions of newcomers who arrive in the U.S. each year.”

Nova Credit is free for users and works by partnering up with banks, telecommunications companies and property managers that use the technology to determine an individual’s creditworthiness. One of Nova Credit’s major partners is American Express. 

With Nova Credit’s partnership with American Express, immigrants from the UK, India, Mexico, Canada and Australia, who don’t have an SSN or an ITIN can qualify for a new credit card with Amex, which uses the Credit Passport® service to determine someone’s eligibility.

If you’re already an Amex card member from the UK, Canada, France or Australia, you can apply for another card through the Global Card Relationship. The Global Card Relationship allows you to maintain the Amex card account from your home country and the Membership Rewards points you’ve previously earned, according to Ashley Tufts, VP of corporate affairs and communication at Amex.

What if you don’t want to open your own credit card?

Bottom line

When it comes to jump starting your credit history in the U.S., there are a variety of ways that you can do so. Depending on what type of identification you have, either a SSN or ITIN, you’ll have access to different credit cards.

If you have an SSN, getting a secured card is a smart first step that will allow you to graduate to an unsecured card in the future. If you don’t have an SSN, signing up for a credit card that doesn’t require a SSN, or becoming an authorized user on someone else’s credit card, are both good choices for establishing your credit history.

Petal cards are issued by WebBank, Member FDIC.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.