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New to the U.S.? Here’s How to Establish Credit

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What we’ll cover: 

  • Even if you have established credit in another country, laws prohibit the transfer of credit reporting information from one country to another, so you’ll have to start new in the U.S.
  • Forms of identification, like a Social Security Number or ITIN, proof of income and a bank account are things to do before you can begin building credit in the U.S.
  • Applying for a secured credit card, using it responsibly and making on-time payments can help you establish credit

Whether you’re relocating from another country to the U.S. for a new job, coming to be with family, or moving to the U.S. for a completely different reason, there are a swirl of emotions you'll likely feel. But there's also a giant list of affairs to get in order. 

And none may rank higher then establishing good credit. Why, you ask? 

Because credit is what landlords, lenders, insurance companies and others will use to determine your creditworthiness, which can dictate how much money to loan to you and what interest rates you'll be offered. 

So without further ado, here are a few things to keep in mind as you build credit if you’re new to the U.S.

Wait, can my credit report transfer to the U.S. from another country?

The short answer is no – you’ll need to establish or re-establish credit once you settle in the U.S.

If you’re coming from Canada, there are laws that prohibit the transfer of credit reporting information from one country to another. Also, many countries outside the U.S. take a different approach to credit. Others may not even have a credit score system, like France. 

Things to consider before you can establish credit

There are three key steps you’ll need to think through before you can start establishing credit in the U.S.: 

  • Get a Social Security number or ITIN
  • Be able to show you have a steady income
  • Open a bank account

Ways you can establish credit in the U.S.

So what now? Well, after you've jumped over the initial hurdles, now it's time to think about how to actually establish and build credit. Fortunately, it's not as hard as it may seem as first glance.

Consider a credit card

If you cannot get approved for a regular, unsecured credit card, a secured credit card could be another option worth looking into. If you’re approved for a secured credit card you’ll be required to make a refundable cash deposit as collateral, and that amount usually becomes your credit limit. 

The important thing to remember here is that making on-time payments can help raise your credit score. Payment history accounts for 35% of your FICO credit score – so continuous on-time payments made in full can help keep your payment history in good standing.

Weigh the pros and cons of having someone add you as an authorized user

There’s much to consider with becoming an authorized user on someone else’s credit card. 

If it’s an avenue you plan to explore, asking a good friend or family member to add you as an authorized user to their credit card can indeed help you establish and build credit, but only if the primary card holder uses the card responsibly (i.e. maintains low credit utilization) and makes on-time payments. 

Going this route means you’d receive a credit card with your name on it, but remember the account holder is ultimately responsible for the payments. 

If the account holder makes late payments, that could negatively impact your credit score. It’s all the more reason why you should tread carefully if you’re considering this route. 

If you rent, consider inquiring about having your rent payments reported

Your rent payment, whether for a home or apartment, can be the largest payment you shell out each month. 

According to NerdWallet, a FICO spokesperson estimated that less than 1 percent of credit files have rental entries. Yet all three major credit bureaus can include rent payment information in credit reports if it’s reported.

If you’re willing to put in the effort, there are a few ways you could try to get your on-time rent payments reported to the credit bureaus. 

One way is to simply ask your landlord (or mortgage lender). You might even explain that you’re new to the U.S. and could use all the help you can get in building your credit file. 

Another option could be to look into the various credit reporting services that accept rent payments and report them to the credit bureaus. These services usually charge fees. Some require you to register with the reporting service; others require involvement from your landlord or property manager.

So you’ll have to determine whether it’s worth spending extra to get your rent reported when there could be other viable options for establishing credit like the ones we’ve gone over in this article.

Reaching you goal starts with saving for it.

This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.  Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.

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