YOUR SUCCESS MATTERS
When scaling a business, it's important to avoid common mistakes to ensure successful growth. Some of these mistakes include: 1. Scaling Too Early or Too Late: Scaling too early, before establishing a solid base, or scaling too late and missing opportunities can be...
The top 8 challenges service-based entrepreneurs faced during periods of rapid growth are: 1. Maintaining Consistent Quality: Service businesses must ensure a consistently high level of quality to retain clients, which can be challenging as the business scales up.[1]...
Based on the search results, here are some common challenges faced by multicultural entrepreneurs when building a brand identity: 1. Language and communication barriers: Effectively communicating brand messaging across different languages and cultural contexts can be...
by AMRESH SINGH.
Many new immigrants and international students find it difficult to start their new life in the US with their credit score or credit history from their home country suddenly invisible in the land of opportunity, America, which they proudly call home now. Therefore, building a good US credit profile is an important component of your financial life in the US.
If you’re a new immigrant or an international student who recently moved to the United States for work, study, or family reasons, you will need a way to build credit history in the US, to access financial products and services. One of the easiest and most convenient ways to build your credit history in the United States is to apply for a credit card.
But with no US credit history, how does one get approved for a credit card? This blog article will offer guidance on applying for a US credit card with no US credit history, in addition to other ways to build credit. We will also outline various options for a credit card for new immigrants and international students and best practices to build a US credit history and maintain a healthy credit score in the United States.
How to get a credit card with no credit history?
Yes, you can get a credit card in US with no credit history. There are few ways to get a credit card in the US, even if you don’t have a credit history. To get started apply for a secured credit card. This type of credit card requires you to put down a deposit, which then becomes your credit limit. You can make use of a secured credit card just like any other credit card.
Making on-time payments will help you build up your credit score. Another option is to become an authorized card user on someone else’s credit card account. The primary cardholder is responsible for the account, but you can use the card and make purchases. If the primary cardholder has good credit, this can help you get started with building up your own credit history. You can also try applying for a store credit card, which may have more lenient requirements than a traditional bank credit card.
1,) Look for a credit report/score to confirm that you don’t really have credit
You can have a credit history without even realizing it. This could be because you are an authorized user on a parent’s credit card account Or could be some kind of mistake. And it can line you up for a better starter credit card or make it harder to get approved.
2.) Check if your school email still works, as student credit cards are the best available for beginners.
Students usually get compared to other people with no credit. So, if you have an active “.edu” email address, it will be an advantage when looking for your credit card.
3.) Compare initial credit cards to find the lowest cost and highest approval rating
If you want to find the best credit card deal. Your top priority should be to get an annual fee-free card whose other terms complement your spending and payment habits well.
4.) Apply online and decide within days, if not immediately.
The credit card application is the simplest part of the process. Simply click on “Apply now” when you find your favorite offer and we will redirect you to the issuer’s online request page. Online application is the fastest application method. They could even be admitted immediately.
5.) Activate your starter credit card
If you are not approved the first time you apply for an initial credit card, please make a refundable deposit to a secure credit card. Protected cards have the best chance of approval because your deposit usually matches your spending limit.
It’s easy to get a credit card with no balance. But once you’ve opened a credit card account, use it responsibly. Above all, that means paying your bill on time each month and keeping your credit usage as low as possible.
Key things to note before choosing your credit card
As a newcomer to the US with no credit history, you may have limited opportunities to open a credit card without credit.
Here are some features to compare and consider when looking at different credit card offers:-
Fees: Credit cards for non-credit can have various fees, including an annual fee you must pay to keep the account open. Also, be aware of usage-based fees, such as Foreign transactions or cash advance fees.
Grace period: Most credit cards have a grace period of about 21 to 25 days. During this period, which runs from the end of your purchase period to the due date of your bill, no interest accrues on your credit card balance arising from purchases. It also does not accrue during your statement period. However, cash advance balances and balance transfers generally have no grace period and start accruing interest right away. If you pay your credit card bill in full by the due date, you’ll keep your grace period and never require to pay interest on your purchases. However, if you don’t pay your bill in full, you’ll lose your crediting period and your purchases will start earning interest immediately. Also, some cards that cater to those with little or no credit don’t have a grace period.
Rewards: Most credit cards offer rewards in the form of cashback, points or miles in the loyalty programs of partner tour operators. The best rewards cards often require excellent credit and may have annual fees, so they’re not ideal credit cards for the uncredited. However, some of the cards above have good rewards programs that can help you earn some cash.
Benefits for Cardholders: Many credit cards offer cardholder benefits for having and using their credit card, even without a credit history. These can range from elite status in hotel loyalty programs and access to airport lounges to protection when using the card for certain purchases. Most credit cards are also not responsible for unauthorized purchases. If someone steals your credit card or uses your account information, you won’t be charged for any purchases.
How does the credit score work in the US?
The credit score system in the US operates on a system of point values. All credit card applicants are scored according to their credit history, and credit scores match what the lender is looking for. The higher your creditworthiness, the more points you are awarded, and the lower your risk of financial default are assessed.
To maintain a healthy credit score, it’s important to use your credit cards responsibly by paying bills on time, keep balances low, and not apply for too many credit cards at once. Households with multiple borrowers or partners should be aware that your credit card issuer may also assess all partners on one overall composite irrespective of who holds the card or pays the bill when applying for credit together.
Some people can have a credit history in their home country, but that doesn’t mean they’ll access it when living abroad. In addition, the U.S., like many other countries around the world, has its own system for calculating and tracking your financial health – one which may not include foreign information or metrics such as those used where you’re from before coming here!
There are three major credit bureaus or credit reporting agencies in the US – Experian, Equifax, and TransUnion. Each credit bureau collects information from creditors (banks, mortgage companies, etc.) about your borrowing history – how much you owe on what types of accounts (e.g., credit cards, auto loans, mortgages, etc.), whether you’ve been making payments on time every month to these lenders according to their terms, and whether your account has been closed or reduced in credit limit.
Key factors that affect your credit score in US
The US credit score is also known as the FICO score and is the most commonly used credit scoring model, created by Fair Isaac Corporation. It’s calculated based on five main factors: payment history (35%), amounts owed as a percentage of total debt (30%), length of credit history (15%), new credit as a percentage of total available credit on your report (10%), and types of inquiries for more than one account or credit mix (10%).
An inquiry means that someone has requested an application or other form of information about you from a creditor – this can include checking to see what type of loan or credit card you might qualify for or investigating your existing financial history.
1) Payment history (35%)
Payment history refers to the past repayments you have made on credit cards and loans. Your credit score takes into account the rate and repayment amount on all lines of credit you have taken in the past to find the average. In particular, late payments, commissions, and charges due to breach of credit terms will be taken into account.
2) Debt (30%)
The amount owed is the amount of money you still owe on all forms of credit. For example, your credit card stays at maximum or you pay for it constantly.
3) Length Credit history (15%)
The credit score will also take into account the length of your credit. If you start building credit responsibly during your studies, it will positively impact your creditworthiness. The sooner and faster you begin building your credit, the better.
4) New credit (10%)
The number of recently opened accounts is also reflected in your credit score. starting several new accounts in a short time can seem irresponsible because you imply that you need several forms of credit to make purchases. It is better to make good use of a few sources of credit than to have many which cannot be followed or which are useless.
5) Types of credit in use (10%)
The different types of credit you hold will be taken into account in your score, such as credit cards, loans, and store cards. Having different types of credit and using them responsibly can be helpful in showing you how to manage your money in different areas. However, this is not an essential part as it is more important to wisely manage one or two types of credit than to abuse many.
What is the credit score range in the US?
The credit score range in the US is 300 to 850.
To be considered someone with excellent credit, your FICO score should be 760+. Anything over 700 is generally considered a good credit score. In contrast, a FICO score under 600 puts you at high risk for defaulting on your debt repayment, and it might be difficult to obtain credit products with a low credit score, or creditors may charge higher interest rates to lend to you than other customers.
Newcomers to the United States should gradually build up their credit scores. Getting a credit card for new immigrants and international students is the best and easiest way to get started.
How New Immigrants and International Students can get a US credit card?
Building credit is crucial to your move to the United States. Therefore, you probably want to get started on building credit as soon as possible. However, there are things you may need before starting the process, such as having an SSN or ITIN (Individual Taxpayer Identification Number) and have a US bank account (refer to our guide on How Foreign Nationals Can Open U.S. Bank Accounts Without SSN or Remotely Before Arriving in the US).
If you don’t have an SSN or Social Security number, you can still apply for a credit card with an Individual Taxpayer Identification Number or ITIN (issued by Internal Revenue Service) and a US bank account.
If you are moving to the US for a job on a Nonimmigrant visa, having an income from the job will help with your credit card application without a US credit history. Similarly, financial institutions will allow international students to apply for a student credit card without established US credit history.
You can get a credit card as a new immigrant or international student with no US credit history in the following ways:
1. Use your credit history from your home country to get a credit card in the US
Some financial institutions or card issuers in the US will be able to use your international credit report and credit history in your home country to process your application for a credit card for new immigrants and international students.
In addition, you might not even need an international credit report for international students as some financial institutions will have special programs designed specifically for international students for building credit in the US while earning rewards and redeeming points for other purchases.
Understanding International Credit Report: An International Credit Report (ICR) might be used to determine your eligibility for credit card products if you have no or thin US credit history. An ICR is a third-party report used to compile credit information from your home country or any countries where you might have a financial history.
2. Apply with a credit card issuer that uses non-traditional data points to determine your creditworthiness
New immigrants and international students are often left out of the US credit system that uses traditional credit scores or FICO score systems to determine your creditworthiness. However, new innovative lenders in the US have realized the need for credit for Newcomers to the USA.
Instead of relying on the traditional FICO-based method to determine creditworthiness, these new innovative lenders and credit card issuers use non-traditional data points such as your occupation, education level, current income (if you’re a professional on a nonimmigrant visa), or your school and major (if you’re an international student), to build your credit profile and issue credit cards to new immigrants. You may not even need an SSN (Social Security Number) to apply for these credit cards designed specifically for US Newcomers.
3. Get a secured credit card in the US
A secured credit card is a type of credit card that requires the borrower to put down a cash security deposit or savings as collateral. The secured credit card issuer sets the deposit amount and can be anywhere from $250 to $5,000, depending on the card issuer’s decision.
The funds on the account are used as protection against borrowing money from an issuer and paying off less than what you owe them. In addition, secured credit cards are a great way to establish credit for new immigrants and international students who are just starting on their path of building credit in the US.
4. Use your relationship with an international bank in your home country
Some international banks might use your existing relationship with them in your home country to issue you a credit card in the US. Such banks will issue you a credit card if you have an account with them back home and they’re willing to extend their relationship overseas.
You will need documentation to prove your residency status in the U.S., such as a passport, valid US visa (or other proof such as an I-94 if you’re from a visa waiver country), and a bank statement from your home country that establishes a relationship with the bank overseas.
5. Apply for a US credit card issued to international students
For international students, it is possible to apply with your student ID and bank account information as proof of residence at your college or university – make sure you know the credit card requirements before applying and are maintaining good credit practices to help build your credit history in the US.
6. Get a US credit card with a co-signer
A new immigrant or international student can apply for a credit card by using their family member, friend’s, or spouse’s information as the co-signer on the account. They will be responsible for making payments if you don’t.
A co-signer has an established US credit history, which can improve your chances of getting approved for a loan or credit card when applying. Before applying, check with your prospective co-signer and be sure they know what they are getting into.
How to Build credit without using a credit card
New immigrants can build credit without applying for a credit card, though credit cards might be the easiest and fastest way. The truth is, there are several ways to build credit without having to apply for a credit card, as outlined below:
1. Become an authorized user
A significant other or family member may agree to add you as an authorized user on their credit card. This will allow for the carryover of payment history to the credit bureaus, and depending on the payer’s credit score, it can also help improve your FICO score.
It’s unnecessary to use the card or even have it in your possession to be an authorized user. However, make sure to find out if the card issuer reports authorized user activity to credit bureaus.
2. Take a credit builder loan
US Newcomers may want to consider applying for a credit builder loan as an alternative to credit cards. These loans will build credit by reporting payment activity to the credit bureaus. Typically, the money you borrow is held by a lender in an account to ensure you can repay your loan. The downside is that you may have to pay an interest rate higher than you may earn through the money deposited with the lender.
3. Get credit for paying the rent
US Newcomers can improve their credit score by having their rent paid on time reported to the bureaus. Some landlords and property management companies report rental payments to credit bureaus. However, if your landlord is not reporting your on-time rental payments to the credit bureaus, some services can automatically do so for you.
4. Report your utility and mobile phone bills directly to the credit bureau
Some credit bureaus like Experian will credit you for the utility and mobile phone bills you’re already paying. Previously, these payments did not positively impact your score. If you’re not using a credit card to build your credit history, make sure you take advantage of this credit build opportunity.
How can International students and US newcomers Build Credit and practice good credit habits
When you open your credit card account, it can take up to 6 months to build your credit score. The credit score is based on your payment history, debt levels, and other factors such as outstanding loans. The higher you can get your credit score, the lower the interest rates will be for any future loan or card application.
As a recent US Newcomer or a student, make sure that you follow the below tips to build and maintain a healthy credit score:
The best way to build and maintain good US credit is by making sure that you pay on time with credit cards, utilities, and rent.
We’ve provided you with some helpful tips on establishing your credit history as a US newcomer and getting approved for a new credit card in the USA with no or thin US credit history. Keep the best practices outlined in this blog in mind if you’re planning on establishing yourself financially while living abroad in the US. If you are new to the US, you may think it’s hard to build credit and get approved for a US credit card with no or thin US credit history, but that’s not really the case! We’ve outlined some of the best ways to get a credit card for new immigrants and international students who want to build their credit score in the USA.
How to get a Credit card without an SSN?
Many people think they need a social security number to apply for a credit card. However, this is not the case. There are several ways to apply for a credit card without a social security number.
1) Obtain an individual tax identification number
In general, only U.S. citizens and non-citizens who are eligible to work in the United States are eligible for a Social Security Number. However, according to the Social Security Administration, you “generally have no obligation” to provide one if you don’t have one.
2) Make sure you meet the credit history criteria
Of course, even if you have a social security number or a tax number for a credit card application, that’s not enough to guarantee approval. Most traditional credit card issuers also check your credit history, which presents a whole other challenge, especially for non-US residents. Even if you had a positive credit history in your home country, a foreign credit history generally cannot be transferred to the United States.
If you have a Social Security number but a thin credit file, you may need to begin building your credit history in the United States by applying for a secured credit card. These cards offer you a deposit, usually $ 200 or more, which the issuer will keep in case you don’t pay the bill. In most cases, your deposit will become your credit limit, for example, make a $ 500 deposit and your credit limit will be $ 500.
3) Check out credit cards that don’t require a social security number
Some credit card issuers use a non-traditional subscription to approve you without a social security number or even a credit history.Eg Deserve® EDU Mastercard for Students and Oportun Visa Credit Card.
4) Enhance your credit without a social security number
Even without a SSN, U.S. credit bureaus will use other information about you, such as your name, address, and DOB to gather information about your credit activity in one place.
To create good credit, you need to show a positive payment history over time. This means that you make regular purchases every month and pay the balance on time.
Can International Students obtain credit cards in the US without an SSN or ITIN?
Yes, international students are eligible for credit cards in the United States without an SSN or ITIN. However, you must submit additional documentation to prove your identity and residency status. Most banks will require you to provide a passport, student visa, and proof of enrollment at an accredited university. You might also need to provide evidence of income or a co-signer. Once you have submitted all of the required documentation, you should be able to get a credit card with no problem.
You could apply for the Deserve EDU Card and Bank of America’s Student Credit Cards without an SSN or ITIN.
If you had an American Express credit card overseas and moved to the United States as a student, consider applying for the annual Blue Cash Everyday Card with no annual fees. While this is not a student credit card, you may qualify based on your existing credit history with American Express in another country. You may also consider applying if you are not a current American Express cardholder, as Amex has access to credit histories of applicants from selected countries.
Most student credit cards require you to have some credit history. However, card providers understand that students may not have an extensive credit history, which is why they consider applications from students with limited credit histories. If you don’t have a credit history, consider requesting a secured credit card backed by a security deposit.
Top reasons why US immigrants/New comers should get a US credit card
A credit card can aid you in spending more than you have so you can get what you need now and pay off the rest later. By placing purchases on a credit card and later successfully paying off the debt, you begin to build a reputation for being good with credit.
The following are the key reasons to get a US credit card if you’re a newcomer and immigrant:
1. Rewards and Points
When you utilize your card to make purchases, most credit card companies offer points based on your spending. As you make purchases with your credit card and earn those points, you can redeem those points for gift cards or special catalog items. Paying by debit card or cash doesn’t offer this added benefit, and that’s one of the many ways a US credit card can add value to your purchases.
2. Cash Back
A few credit card companies offer cash back; For example, Discover was the first company to offer a 1% discount on purchases. As stated in the previous point, using cash or a debit card will not save you money on your purchase. Then, whatever you save by building your credit is a bonus – money that can be used for other things or to pay down debt that you need to pay off.
3. Claim Air miles
Around the 1980s, American Airlines came up with the idea of giving air miles with associated credit cards. Similar to cashback or a points system, this provides incentives for those who use American Airlines credit cards. Depending on your needs, airline miles and the potential for free flights can be even more valuable than rewards or cash back.
4. Fraud Protection
When someone takes your debit card and makes a purchase, the money is taken directly from your account. Any form of direct payment is more difficult to protect against theft and fraud. Once you have made a transaction, that money needs to be collected. Fraud investigations can take time, during which time your credit score can be unnecessarily affected. A credit card is not a direct form of payment. They can notify your credit card company that a theft has occurred and if they deem it valid, they will remove that payment from your account.
5.Credit cards are Universally accepted
You can’t book hotel rooms or rent a car with a debit card. Hotels and car rental companies want the added security of being able to charge someone in the rare event you suffer damage. If you are planning to travel, the credit card is practically a necessity: the mobility you have in the United States is greatly hampered if you cannot rent a car or a hotel.
6. Purchase now, pay later
Sometimes life’s demands are greater than your existing budget, which is why a credit card can be extremely useful. Knowing that you can pay for your purchases later, especially if you are starting a new job in a new location, will help you prepare before your paycheck arrives.
How to build credit fast?
Having credit and managing it responsibly usually leads to good credit, but there are some tips you should consider to make your score the best.
To get started, take a moment to set up automatic bill payment or automatic recurring payments whenever possible. The key element that negatively impacts your credit score is late or missed payments.
Also, you can build credit by paying off outstanding debts on time and in full.
See Original Article at Home Abroad
