Newcomers to the U.S. often aren’t able to get a credit score— not because they won’t pay their bills on time, but because they don’t meet the minimum requirements to get started. You may have years of excellent credit history in your home country, but that credit history generally can’t help you when you come to the U.S. – an issue that Nova Credit is addressing.
In this article, we will discuss how long it takes to build a credit score and wille showcase real stories of people who have done so successfully after newly arriving in the U.S..
Starting from zero isn’t easy, but Ruby Escalona was motivated and took a proactive approach to building credit when she moved from the Philippines to Florida in 2013. Immediately, she realized that establishing a local credit score was a priority. “At first, it was because I wanted great credit cards so I could start travel hacking and getting almost free flights to fly back home,” she says. “Then, it moved on to qualifying for a mortgage to own a home of my own.”
Ruby Escalona moved to the U.S. in 2013 and actively took steps to build her credit.
Similarly, Sarah L. (Sarah asked we keep her surname private) had to deal with the credit problem when she moved to the U.S. in 2016 to be closer to her American husband’s family while they raise their son. Sarah had built credit in Canada, but didn’t have a credit history in the U.S.
Did you know?
You can use your international credit history to apply for a U.S. credit card with no credit and without a Social Security Number
Credit history used to stop at the border—until now. Your existing international credit history could help you get credit in the United States. No SSN is required to start your credit history today.Learn More
“I wanted to know I could open my own accounts if anything were to happen to my husband,” Sarah says. “I also run my own business and wanted to establish credit to open a business credit card. We were also planning on purchasing a home someday, so I needed to make sure I was creditworthy.
How credit scores work in the U.S.
Credit can be incredibly important in the U.S. Whether you want to take out a car loan, personal loan, get a credit card, or rent an apartment, having a good credit score can help. For some jobs, your credit report may even be a factor in whether you get hired or promoted. However, the credit system might work differently in the U.S. than in your home country.
Looking for guidance ongood credit score? Here are the key items to know:
There are three major consumer credit reporting agencies: Equifax, Experian, and TransUnion. There are several places where you can check your credit score and report for free such as Credit Karma and Annual Credit Report, which will help you know where you stand and learn how to boost your credit score.
The credit bureaus maintain large databases with consumers’ positive and negative credit information. Most of the data comes from creditors, such as credit card issuers and lenders, that send information to the credit bureaus. Additionally, the credit bureaus collect public information from the court systems, such as whether someone has declared bankruptcy.
When you apply for credit, the financial institution or creditor can request a copy of your credit report from one of the bureaus. The bureau will then try to create a report by matching your identifying information (such as your name, address and Social Security number) with information in its database. The bureau sends this credit report to the creditor.
Creditors can also request a credit score based on that credit report. If it does, a credit scoring model (there are many scoring models in the U.S.) will analyze and score your credit report. The credit can use the credit score and information from your credit report to help decide whether to approve or deny your application and to set your terms.
Newcomers to the U.S. can get caught at several steps. Getting a credit score in the U.S. can be difficult, both because the process itself may be confusing and because it is difficult to get U.S. credit products to start building a track record if you do not have a credit history in the first place.
First, most people don’t have accounts that get reported to the U.S. credit bureaus. Even if the same credit bureaus operate in your home country (Equifax is in Canada as well, for example), there are separate databases for US residents.
As a result, you won’t have a credit report and can’t get one until you can open an account that’s reported to the bureaus. You may see the circular problem here—it can be difficult to get approved if you don’t already have a credit history, but you’ll need to open a credit account to build that history.
Additionally, credit scoring models have minimum scoring requirements. For FICO® Scores, the most widely used scores, you’ll need to have an account that has at least six months’ worth of history before you’re “scorable.”
It can be easier to qualify for a VantageScore credit score, which only requires one month of credit history. However, if the creditor only uses FICO Scores, having a VantageScore might not help open a new account.
Important: You do NOT need a Social Security Number to start your U.S. credit history. Experian and TransUnion will track and attempt to match your name, birth date, and address to your credit history. However, specified personal information like an SSN and ITIN make it easier for credit bureaus to report information accurately.
How to start building credit once you move
There are a few financial products that are created specifically to help people build credit. In addition to transferring your credit history from your home country, you may benefit from using these tools that are created for people who have no credit or poor credit histories.
Many newcomers who move to the U.S. use one, or several, of these to start building credit:
Open a secured credit card.
In most instances, it’s difficult to get a U.S. credit card without a U.S. credit history.. When you open a secured credit card, you’ll have to give the issuer a refundable security deposit, which will determine your card’s credit limit. The security deposit reduces the credit card companies’ risk of lending money, which is why it’s easier to get approvedHowever, be mindful of the interest rate, as they are often considerably higher.
Open a credit-builder loan.
A credit-builder loan offers a similar arrangement, but with an installment loan rather than a credit card. You’ll give the lender a refundable security deposit and receive a loan for the same amount. Once you repay the loan, you’ll get your deposit back.
Become an authorized user.
If you have a close friend or relative in the US, another option may be to become an authorized user on one of their credit cards. Once you’re an authorized user, the credit card company can send you a credit card that’s linked to the other person’s account. The company could start reporting the account’s activity to the credit bureaus with your information, and it may even report the account’s entire history as well.
Ruby did two of these. “I opened a secured credit card at first, and I was lucky because my boyfriend of a few weeks at the time (now husband) was sold on the travel hacking idea and put me as an authorized user on his credit card,” she says.
Sarah also became an authorized user on her husband’s account as soon as she received her green card, and opened an unsecured card of her own after about a year.
How to get a credit score of 750 after one year
There’s no saying exactly how long it will take to get to a specific credit score. However, credit scoring models may consider similar factors to determine your scores. Knowing and focusing on these factors can help you build a good credit history. Over time, this can lead to having a good or excellent credit score.
The primary scoring factors are often broken up into several categories:
On-time payments can help your scores, while late payments can hurt your scores. Falling further behind on payments can increase the negative impact on your scores.
The current balances on credit cards relative to their credit limits, also known as your credit utilization ratio or utilization rate. Having low credit card balances is best for your credit scores, while high balances could hurt your scores.
Having a mix of installment and revolving accounts can show you know how to manage different types of credit, which could be good for your scores.
Length of credit history.
Having a longer credit history may be better for your credit scores, as is a higher average age of your accounts.
If you apply for a new credit account of your own (not to become an authorized user), a hard inquiry could get added to your credit reports. Hard inquiries can hurt your scores a little.
If you’re an authorized user on someone else’s account, whether that person pays the bill on time, uses a large portion of their available credit, and the length of the account’s history could impact your scores.
That may have been what helped Ruby build credit quickly. She says, “It took me between three to six months after my authorized user addition to get to a score in the 720s. It was enough for me to get pre-qualified for some of the better travel hacking credit cards.”
Ruby and her husband have used the rewards to travel all over the world and have visited Alaska, Turks and Caicos, Mexico, Jamaica, and Cuba. They share stories and advice on their personal finance website, A Journey We Love.
Sarah also tracked her credit and was in the low 700s a few months after she became an authorized user. “However, it was still difficult for me to open a credit card on my own because my credit history was still too new at that point. I think it took another year before it went up another 50ish points.” Then, she was able to get an unsecured card on her own.
Whatever types of accounts you want to start with, you may want to sign up for a free credit monitoring service. Many of these also give you access to a free credit score, and some let you see copies of your credit reports. Once you’ve established credit, you can also request a free copy of your credit report from each of the major credit bureaus once every 12 months at AnnualCreditReport.com.
How Nova Credit can help you establish credit
Nova Credit creates a global Credit Passport that can help people bring their credit history with them when they move to the U.S. While your credit history won’t be transferred to the U.S. bureaus’ databases, creditors and lenders can use your Credit Passport to evaluate your application for a loan, apartment, or another type of credit account.
Sarah and Ruby moved to the U.S. before Nova Credit’s service was available, but they both see the benefit it offers.
“I think it would have helped if I came here on my own for sure,” says Sarah. “Without the help of my husband, I'm not sure I would have established credit as quickly as I did. I know it would have been challenging to get things like utilities without a deposit.”
For Ruby, the move was made easier because her company helped her get settled with a visa, Social Security number, bank account, credit card, and driver’s license. She was also coming from the Philippines, where the credit system is very different, and says she didn’t have a credit history to bring with her even if she wanted to.
However, Ruby sees the value for people coming from other parts of the world. “This would have helped people who lived in the UK,” she says. “One of their gripes (based on people I know who moved from the UK to the U.S.) is that they had amazing credit back home but had to go back to zero in the US.”
Nova Credit currently connects to international credit bureaus in Australia, Brazil, Canada, India, Mexico, South Korea and the UK.
Use your international credit history to start your U.S credit history
New to the U.S.? Check if you can use your country's credit history in the U.S. to apply for credit cards and start your U.S credit history using Nova Credit. No SSN is needed to start your U.S credit history.Explore Credit Cards