How to Build Credit as a U.S. Immigrant

Immigrating to the United States is a tremendous undertaking. Once you get settled in, you’ll be ready to build your new future. If you want to establish a solid financial footing in your new home, you can start by focusing on your credit.

Many people don’t realize how to build credit as immigrants. We’ll take you through the first steps in building (or improving) your credit in the United States.

How to build credit as an immigrant to the U.S.

Want to start building your credit as an immigrant to the U.S.? Here are a few strategies to help you get started.

1. Apply for a student credit card or secured credit card

For those who want to build credit as immigrants, getting a student or secured credit card is a good place to start. Student cards are designed for people with little to no credit history, so you may be approved for one even if you have no credit.

Secured cards are a little different. You’ll make a deposit to start, and that deposit then becomes your credit line. Once you’ve established that you can make and repay purchases, the card issuer may upgrade you to a standard credit card. As long as you’ve paid off all of your purchases, you’ll get your deposit back.

2. Use a credit-builder app

If you’re an immigrant with an ITIN instead of an SSN, getting approved for credit cards and installment loans can be difficult. However, many credit-builder apps will accept applicants wth ITINs, and Kikoff is one of them. 

Kikoff makes building your credit simple. Here’s how it works:

• If you apply and are approved, we give you a small credit line to use in the Kikoff store
• You pay off the purchase over time, interest-free
• We report your on-time payments to all three credit bureaus

Your payment history is the most important factor when it comes to your credit score. For just a small fee, our basic plan can help you start building strong credit.

If you’re looking for even more credit-building tools, you might be interested in one of our premium plans.

3. Ask to be added as an authorized user

If you have a family member or friend who is trustworthy and has decent credit, consider asking to be included as an authorized user on their credit card. This can increase your credit score as long as the cardholder uses the card responsibly.

However, this method isn’t foolproof. If the owner of the account maxes out the card or misses payments, your credit can be damaged along with theirs.

How the U.S. credit system works

The U.S. credit system was designed to help lenders decide whether to extend credit to borrowers. Three credit bureaus (Experian, Equifax, and TransUnion) compile financial information for each person into a credit report. The report includes a credit score, which the bureaus calculate using five weighted factors:

• Payment History: 35%
• Total Credit Utilization: 30%
• Length of Credit History: 15%
• Amount of New Credit: 10%
• Credit Mix: 10%

Credit scores are typically between 300 and 850. The higher the credit score, the less risk a borrower is likely to pose to a lender. 

Borrowers with higher scores usually qualify for lower interest rates and better loan terms. Consumers with low scores might not qualify for loans at all. In some states, a low credit score can also affect your ability to find housing or a new job.

Can you build credit without a Social Security Number?

If you’re not a citizen but are authorized to work in the United States, you should apply for a Social Security number (SSN). It’s free to apply, and you can do so online.

It’s much easier to build credit if you have an SSN, but there are still ways to do it without one. If you don't qualify for an SSN, you should apply for an Individual Taxpayer Identification Number (ITIN). Not all lenders will accept ITINs, but some will.

How early should you build credit when immigrating to the U.S.?

It’s best to start building credit as soon as you can. The length of your credit history accounts for 15% of your credit score, so focusing on building your credit now will pay off in the long run.

Common mistakes to avoid

People looking to build credit as immigrants should be careful to avoid potentially costly mistakes like these:

• Keeping all money in cash instead of utilizing banks or credit cards
• Not applying for an SSN or ITIN
• Allowing other people to manage your finances for you
• Not taking steps to build credit and establish a financial history

As you work to build your credit, you should also take the time to educate yourself about the American credit system and finances as a whole. When you have a solid grasp of how the system works, you’ll be less likely to make credit-damaging mistakes.

Conclusion

For people trying to build credit as immigrants, getting approved for credit-building platforms can be hard. At Kikoff, we take pride in helping people like you create strong financial foundations.

If you want to learn more about what we do, get in touch with us today. And if you’re ready to get started, it takes only a few minutes to open an account.