For a foreigner to get a credit score in the United States, they generally need to build a credit history by taking certain steps, as credit scores in the U.S. are based on the credit history accumulated within the country. Here’s how a foreigner can establish a credit score in the U.S.:
1. Get a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- SSN: The most common method is to get a Social Security Number (SSN) if you are eligible (e.g., if you are a legal resident, have a work visa, or have permanent residency).
- ITIN: If you’re not eligible for an SSN, you can apply for an Individual Taxpayer Identification Number (ITIN) from the IRS. While an ITIN is primarily used for tax purposes, some credit bureaus and financial institutions will accept it when establishing a credit history.
Note: Having an SSN or ITIN is essential for reporting your credit activity to credit bureaus.
2. Open a U.S. Bank Account
- Why it’s important: Opening a checking or savings account with a U.S. bank is often a first step in establishing a relationship with U.S. financial institutions. While having an account doesn’t directly create a credit score, it helps establish a financial footprint in the U.S., which could later assist in qualifying for other types of credit.
3. Apply for a Credit Card (Secured or Unsecured)
- Secured Credit Card: This is often the best option for newcomers. A secured credit card requires you to deposit a sum of money with the bank as collateral, and your credit limit is typically the same amount. It is easier to qualify for a secured credit card, and by using it responsibly (making regular payments), you can start building your credit history.
- Unsecured Credit Card: If you can qualify, an unsecured credit card doesn’t require collateral, but you’ll need to have some form of credit history in the U.S. or a U.S. bank account to apply. Some banks offer student credit cards or credit builder cards that are designed for those with limited or no credit history.
4. Get a Credit-Builder Loan
- Some financial institutions and credit unions offer credit-builder loans. These are small loans that you borrow and repay in installments over time. The financial institution typically holds the amount you borrow in a savings account or certificate of deposit until the loan is paid off.
- Successfully repaying a credit-builder loan can help establish your credit history and improve your credit score.
5. Become an Authorized User
- If you have a family member or close friend with good credit, they can add you as an authorized user to their existing credit card account. This means their positive payment history and credit utilization will be reported on your credit report, helping you start building your credit.
- Note: This is a great option if you’re new to the U.S. and may not have a credit history yet.
6. Rent Payments and Other Bills
- Some services allow you to have rent payments and other utility bills (like phone or internet) reported to the credit bureaus. Companies like Experian Boost can add utility and phone bill payments to your credit file, potentially increasing your credit score.
- You can also ask your landlord to report your rent payments to the credit bureaus.
7. Monitor Your Credit
- Once you start building a credit history, you can track your progress by checking your credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion). You can access a free credit report once a year at AnnualCreditReport.com.
Timeframe to Build Credit
Building a credit score can take time. You may not have a score immediately, but by consistently managing credit responsibly, you can start to build your credit profile. It often takes several months of credit activity before a credit score is generated.
Credit Score Models Used in the U.S.
The two main credit scoring models used in the U.S. are:
- FICO Score: This is the most commonly used model by lenders.
- VantageScore: Another popular model used by some lenders and credit monitoring services.
Key Tips for Building Good Credit:
- Pay bills on time: Timely payments are one of the most important factors in building good credit.
- Keep credit utilization low: Try not to use more than 30% of your available credit limit on any credit card.
- Monitor your credit regularly: Keep track of your credit score and report to ensure accuracy and identify any issues early.
By following these steps, a foreigner can gradually establish a credit history and, eventually, a credit score in the U.S.
