Relocating to the US may pose a slew of challenges. Building a credit score from scratch is potentially a tough challenge for new immigrants to the United States on a US visa. The credit score they had in their home country probably won’t count in the US. Without a US credit score, you may struggle to access financial products such as loans and other forms of credit. Even some employers check your credit score before hiring you. If you are an Indian who has moved or planning to move to the US, you might be thinking how can Indians establish a U.S. credit score?
Here we will describe some options to build a credit report as an immigrant to the US.
How can Indians Establish a U.S. Credit Score
As a new immigrant to the US, you have several ways to start building your credit report. For beginners, getting a credit card, credit builder loan, keeping credit utilization low, paying bills on time, etc. are some of the best ways to start building a credit score.
Credit Cards for New Immigrants in the US
There are a few types of credit cards available for new immigrants to the US. People with no credit history can get a secured credit card. Interest rates on these credit cards may be higher, and they offer low credit limits, but they will help you start building credit right away. If you use your credit card judiciously, it will help you establish your credit score as an Indian immigrant to the US. When applying for a secured credit card, make sure the lender/ bank reports activity to the credit bureaus.
Nova Credit
New immigrants from India can consider the Nova Credit program, to translate the credit score they had in India to US credit rating through its Credit Passport® service. Nova has a partnership with American Express, and immigrants from India, UK, Mexico, Canada and Australia can qualify for a new credit with Amex, even without a Social Security Number (SSN) or ITIN.
Get Credit for Paying Rent and other Bills
Although rent payments are not automatically reported to credit agencies that collect rental data, some property management companies and rent services report payments to credit bureaus. These payments can be considered in your credit report. If your landlord or property manager doesn’t report rental payments, you should find a third-party service provider that can automate your rental payments and report them to a credit bureau.
Co-sign on a Credit Card
If any of your friends or relatives has a credit card in the USt, you could become an authorized user on their account. As an authorized user, you can make purchases using their credit card. Transactions made using the card and its payment history can be added to your credit report.
It is important to note that not all credit card lenders report the authorized user account to the credit bureaus. So, you must first ensure that your spouse or loved one’s issuer reports to the credit bureaus. Find a primary cardholder who uses the card responsibly because keeping credit card utilization ratio can work against your goal of building credit.
Credit-builder loan
You can get a credit-builder loan to start building your credit score. Credit unions and community banks offer credit-builder loans. Unlike traditional loans, these loans help borrowers establish credit and pay their urgent expenses. Before applying for the loan, make sure the credit union that manages it reports repayments to the credit bureaus.
Some new-age lenders like Stilt specialize in offering loans to US immigrants. They review aspects beyond a credit score when evaluating applicants for a loan. After approval, the loan and repayments are reported to credit bureaus like Experian and TransUnion, which can help Indians establish a U.S. credit score.
Final words
Building credit for Indians as an immigrant in the US takes time and needs patience. Once you have obtained a credit card or loan, managing it judiciously will help you improve your credit score. You need to pay your credit card bills or loan installments on time, keep credit utilization low and be careful about applying for a new credit card to build a good credit score.
NRIs living in the US can get in touch with us. We at SBNRI are here to help you out with everything related to financial and legal services required by NRIs back in India.
You can download SBNRI App to connect with our experts and get end-to-end assistance related to bank account opening and investment in India.
You can also click on the button below to ask any questions. Visit our blog and YouTube Channel for more details.
