Building US credit from zero
In short: a credit history from another country usually doesn't carry over to the US, so newcomers often start from zero. A secured credit card or a credit-builder loan, paid on time every month, is a common way to begin. Check your credit reports for free and keep the amount you owe on cards low.
Why it matters
Lenders, landlords, and sometimes phone companies and insurers look at your credit report to decide whether to work with you and what to charge. A good history can mean lower interest rates and smaller deposits.
Ways to start
- Secured credit card: you pay a deposit, which usually becomes your credit limit. Use it for small purchases and pay the bill in full each month. Check that the card reports to the three national credit bureaus.
- Credit-builder loan: offered by some credit unions and banks. The money you borrow is held in an account while you make payments, and you get it at the end. Your on-time payments are reported.
- Authorized user: someone you trust adds you to their credit card. Their payment habits can affect your record, good or bad.
Some card issuers accept an ITIN instead of an SSN. Ask before you apply, and apply for only what you need: each application can show up on your report.
Habits that build a good score
- Pay on time, every time. Payment history is one of the most important parts of a credit score. Automatic payments help.
- Keep balances low compared with your credit limits. Experts often suggest using less than 30% of your available credit.
- Be patient. A longer history helps, so keep your oldest accounts open if they cost nothing.
Check your credit reports for free
The three national credit bureaus are Equifax, Experian and TransUnion. You can get your reports from all three for free every week at AnnualCreditReport.com, the official site. If something is wrong, you can dispute it with the bureau.
Watch out for
- Companies that promise to “fix” or “build” your credit quickly for an upfront fee.
- Cards with high annual fees or many extra charges. Read the fee table before you apply.
Handy tools
- Loan and EMI calculator: monthly payment, total interest and a year-by-year table.
General information, not financial advice. Rules, fees and rates change and depend on your situation. Check with your bank, the provider or a qualified professional before you decide.