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How Can Foreigners Create Credit in the United States?

or in other countries, for that matter?

I recently put together a page on my blog which covers the story of my quest for a credit history. It gives some background details and links to each post with a summary. I wanted to assemble all of those posts in the same place so they can be more useful for people trying to get their own credit.

After a conversation with a friend tonight I started asking another question.

He mentioned that a coworker had bought a car for cash because he didn’t have a credit history in the States. The man was French and had plenty of credit history over there, but it didn’t transfer when he immigrated here.

I knew many things weren’t transferable when one moves, but I hadn’t even though of whether credit would or not. It makes some sense, I suppose, since they probably use an entirely different system than FICO. And the history is harder to verify because of language and convenience barriers.

So dear readers, I’m going to throw this out to you. Are any of you immigrants to the States? US citizens who have emigrated elsewhere? Non-US immigrated to non-US? I’d love to hear how you went about establishing your finances (and particularly credit rating) in a new country and what you’d recommend others do in your situation. I’d like to collect these so that others have a better idea of what they’re facing. We can do it as an interview or as a guest post, depend on which you’d prefer.

You can contact me, or leave a comment indicating you’d like to share your experience (I’ll e-mail you, then), or even leave a super-long comment which I may or may not incorporate into a post later on.


{ 5 trackbacks }

131 Star Bloggers and Their Best Posts | Catherine Lawson
July 17, 2008 at 9:25 pm
Saturday’s Best of the Web Roundup: July 19th, 2008 (Ask Mr Credit Card’s Blog)
July 19, 2008 at 6:42 am
American Establishing Credit in France
August 11, 2008 at 11:01 am
Guest Post at Mrs Micah — Almost Frugal
August 12, 2008 at 2:30 am
The other side of the card — Almost Frugal- a frugal blog
February 28, 2009 at 3:39 pm

{ 21 comments… read them below or add one }

Ashley @ Wide Open Wallet July 16, 2008 at 11:54 am

I know a lot of people have a friend or family member here put them as an authorized user on their credit cards. But I heard rumors that doesn’t/ isn’t going to work anymore. I don’t know if that’s true or not.

mrsmicah July 16, 2008 at 11:58 am

You’re right, Ashley, that has stopped working. Joint account holders still get credit history but most cards only allow two (generally they’re spouses or partners). That way you can’t use your credit history to get credit for 15 different people, just one (at a time).

Tina July 16, 2008 at 1:36 pm

As “non-resident aliens” (don’t you love how welcome that term makes you feel?!) in the US, it has been extremely hard to establish any sort of credit rating here even after 1.5 years! Similar to your friend, we had good credit ratings/references in our home country, but they don’t count here.

I would recommend getting a secured credit card (i.e. linked to your savings account) from a major bank. But bear in mind that it takes around one year to develop the credit record from this statement.

Otherwise, if it’s any consolation, we’ve discovered that no credit history is better than a bad credit history in getting things like apartment rentals.

Looby July 16, 2008 at 1:41 pm

As a UK to Canada transplant, I agree with the secured credit card, as the easiest means of establishing a credit history.
I did have a few issues getting a bank account set up when I had no permanent address in the country (and couldn’t get a permanent address without an account!).
Feel free to email me if you like.

plonkee July 16, 2008 at 2:55 pm

Another topic that I’ve wondered about previously.

I had bank accounts in the US before when I was a temporary resident which wasn’t too much of a problem – although I didn’t stay for very long.

I’ve heard rumours that if you have an Amex outside the US, they are willing to look at your existing credit history and then issue a card. It’s possible that you might persuade someone like HSBC (or a bank big in your home country) to do the same, especially if you live in an area with lots of expats.

On expat forums some people suggest getting a (poor rate) car loan and considering the interest as the cost of establishing credit.

heartbeat July 16, 2008 at 3:54 pm

we have hosted for foreign exchange students many times and they never had a problem with credit. matter of fact, they have those credit cards before that get on the plane. and if they dont’ have credit before getting here, they just call their family if they need more money. also, if an immigrant is a student, then establishing credit is not that difficult…the schools give them all the help they want.

Dad July 16, 2008 at 5:48 pm

My wife’s sister had a terrible time with this. She was buying a house for her Mother in the US. This sister, however, lives in Europe and has for some years. Her entire US credit history had expired of old age. She had credit in Europe but couldn’t get it to transfer. I forget how she solved the problem. I know she has a US bank account that she uses to transfer money between Europe and the US. She may have worked with that bank to do something. It used to be a problem anywhere. Your credit was very local, your local bank or merchant. Major credit cards led to the founding of Credit Bureaus. While we sometimes have big problems with the Credit Bureaus, they do help us. Unfortunately they are basically national in nature. I know that Canada has its own system and the UK. I don’t know how the UK works with other parts of Europe or between European nations. The EU probably has done some things with that but id doesn’t help the Europe versus North America problems.

Faye July 16, 2008 at 7:11 pm

As long as you have a job, paystubs, and tax returns, they’re willing to give you a credit card here in the Philippines.

We can bring our credit cards to the US, but that does not allow us to start building credit history there. Secured cards are the way to go. But I think there are some credit unions that issue credit cards, but with very high interest rates. I know Citibank has one, too.

Vered July 16, 2008 at 7:13 pm

My husband and I relocated to the U.S. from Israel, 9 years ago. We had no credit history of course, but I can’t say that it was a bad experience. Just a bit challenging.

We were able to get a couple of credit cards with an extremely low limit (I think it was $500 or so) and high interest (which we were not concerned about because we always pay our statements on time and in full).

We had a bit of a hard time getting a cell phone contract, and eventually got a very limited plan.

After a couple of years of building a flawless credit history, we started getting offers for better plans and better credit cards.

Re: car, we always pay cash for our cars anyway, but I imagine it would have been a problem to get a loan.

Bottom line: it wasn’t too bad. But building credit history does require patience.

guinness416 July 16, 2008 at 7:57 pm

Plonkee, in my experience moving around a lot of people have “heard that” HSBC will hook you up but I’ve never found anyone for whom it’s worked (I work in an expat industry and know a few who’ve tried). You’re at the mercy of the corner-office jobsworths in any particular branch, no matter how global the bank.

I’m not sure how valid pre-2001 anecdotes are. I did the additional credit card thing when I moved to the States in 99, but after 11 Sept banking became very odd for me as a non-green card holder.

learning the ropes July 16, 2008 at 8:25 pm

Immigration to another country puts a person into a unique and challenging situation finance wise. When I moved to US from India, it was because of an intra-company transfer. Thankfully my company had the foresight to buy a membership with AIG for me. So they took care of securing an HSBC credit card for me. But it wasn’t only credit, getting a checking account with a bank was also tricky because for a month or so, I didn’t have SSN. So I went to BofA and on the basis of my passport and work visa they let me open the account.
My husband who migrated as my dependent had a bigger problem because he didn’t have a n AIG membership to get him a credit card. So he ended up getting a secure card from Bank of America. Which had the same credit limit as the account he had already deposited in the bank. On top of it they charged some 35$ as annual fee. (Yes! we PAID money to get a credit card, No! I’m not from Mars, Yes! India has credit cards too! and No, we don’t pay annual fees there either) After 7-8 months when he had established some sort of credit history to get him going, he got another credit card and canceled the BofA one.

Zhu July 16, 2008 at 10:14 pm

I’m in Canada (permanent resident, soon to be citizen) and I’m French. I can share my experience if you want… same as in the USA.

Basically, in France, credit history doesn’t really exist, because credit cards DO exist but are rarely used.

I recently posted about that (this is not spam, just remove the link if you don’t need it!):

http://correresmidestino.com/a-nation-under-debt/

😉

fathersez July 17, 2008 at 12:41 am

I once called Citibank which had given me a credit card in India. And they gave me one in KL straight away.

Not sure if this means tranferring credit history across borders.

Regards

Tina July 17, 2008 at 2:09 am

Re: the Amex thing, we had that. Amex wouldn’t let us transfer our credit history to get a US card, and in fact thought we were very suspicious since we suddenly were in three countries in as many weeks.

Cath Lawson July 17, 2008 at 4:36 am

Thanks for inviting people to post about this Mrs M. As I’m considering moving to Canada, I’m really keen to learn about the experiences of people who moved there. And I’m wondering how long it will take to build up a good enough credit rating to get a mortgage there.

Now Vered mentioned the difficulty in getting a cellphone contract. I hadn’t even thought about that. What about home phones? Does anyone know how difficult it would be to get a home phone contract in Canada? Thanks.

Looby July 17, 2008 at 1:08 pm

@ Cath- I had no problem getting either cell phone or internet connection in Canada. I don’t have a home phone but my internet provider has offered me the option every bill since I signed up as well as when they connected me, so I don’t imagine it would be an issue.

Livingalmostlarge July 17, 2008 at 11:52 pm

Yes I’ll write about it later.

cybele July 19, 2008 at 8:30 am

Well, having now lived in the US, England, Denmark and France and having had to go through the processes of building credit in each place, as well as continuing to buy/sell things in the US (since I retain citizenship), I can report what has/hasn’t worked well for me.

What works: Establishing a bank account asap in a new country, and then trying to find one contact at the bank with whom you can work on a regular basis. Once you’ve got a “banker-friend” – preferably someone you’ve actually met rather than just talked with – you can ask lots of questions and get recommendations and introductions. To the maximum extent possible and reasonable, I’ve tried to use the bank to arrange savings accounts, car and health insurance, mortgages, or whatever, so that you rapidly build a portfolio and they have visibility/feel reassured. This may limit some opportunities to play the field, or to be able to move monies around to chase interest rates or whatever, but in the end, I think it’s worthwhile and also simplifies the process. I also try to provide a lot of positive feedback to my banker-friend whenever she/he is helpful. My French banker is so motivated that whenever she sees something she thinks can earn more interest on an account, she calls and writes at once. Our Danish banker was incredibly helpful when we moved to France and helped with a bank-to-bank introduction and a bridge loan…I’m not sure how that would have worked without him.

I have used my banker also to help when nieces/nephews were visiting and needed a local (European/based) debit card. In our case, the banker set up sub-accounts under my primary card, after we’d submitted various doc’s (passports, principally) and I’d signed up to be fiscally responsible. If the visitors had remained here for a longer period, then we’d have worked out a longer-term strategy…using his know-how.

One quirk of most European countries is that an electricity bill/phone bill, showing your home address, is often something you need to show to prove that you live where you say you do. Why this is adequate proof is beyond me, but it is very widely accepted and required.

Most European banks are internet-based to an extent that the US doesn’t seem to offer, with cheques being nearly unknown and many more payment options/transfer capabilities and cross-border transactions to choose from. (I know this will be hard for US readers to believe, but the US banking system looks very primitive, seen from Europe.)

What doesn’t work well: as Dad points out, when your credit history is out of date, it’s a massive pain in the whatever. You end up dealing with supplying lots of data on your financial life (which you may not really fancy doing) to a bunch of people just so you can get your bona-fides in place. And even then it’s difficult. The US is the worst for this, I suppose because there is more bad debt (?). But France is no slouch, either, at requiring lots of proof of fiscal strength/solvency, especially — and understandably — if you are doing a big transaction like buying a house.

US websites are often bad at being able to handle orders from outside the US/Canada, by the way. Not that that’s what this topic is about, but… they force a zipcode/postcode in North American format, can’t handle a non-US formatted phone number, and heaven forfend if you actually want to add a billing address outside the US!

On this topic, they English are just as bad, by the way…want to order something and have it shipped to some one else? then…fax a copy of your electric bill (I mean…fax!) to them, along with a copy of your (electronic?) order. yeeks. what century is this?

anyway…that’s a bit of a ramble…

RH July 19, 2008 at 11:51 am

Well, I can tell you from my personal experience.

I am a Grad student in USA, coming from a country in South Asia. When I first came here, I had zero credit history. I landed with about $2000 in cash. I guess my bank account created the first entry in my credit history here.

As I was totally ignorant about “Credit history”/report/bureaus, for several months, I used cash and my visa check card, even using the latter online!! As I didn’t have credit history, I had to put a 100$ deposit to get electricity and a similar deposit to get a land phone line.

After a couple of months, I decided to get a credit card, and started applying. But, as I had zero credit history (save for my checking accounts), I was turned down by not one but almost 6-8 card companies. All of them said I had no credit history, so not eligible.

Then I turned to my school’s credit union, which had a visa card. They were nice enough to give me a credit card with a $500 limit. After using it for 5 months, I got the discover student card, amex blue cash for students etc.

Even after being in USA for 5 years now, I think the short length of my credit history is a negative factor in lowering my credit score.

Melissa December 15, 2008 at 3:24 pm

Im an international student in the US and I had a cell phone which I cancel cause I couldnt paid the bill. Now they told me that they are going to pass that to my credit. Can they do that if I dont have a SSC number? Or can they damage my credit in my country? They have my passport number, can they do something with that?

Thanks

Tom February 5, 2009 at 9:49 am

The way I did it was get an Amex in Canada then when I moved to the US I called AMEX global transfer 1-800-453-2639 and they gave me a US AMEX. Then my wife and I bought a new Subaru. After much arm twisting we found that Subaru has a program for ex pats through Chase.

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