By Isabelle Colombo, International Relations professional with over ten years of experience in the financial sector in the United States.
Brazilians often arrive in the United States (USA) not knowing that their financial history does not cross the border with them. When they get here, immigrants must start from scratch to build their credit history and thus have access to basic things like buying or renting a house, leasing¹ a car, getting a cell phone or even going through a company’s recruiting process. Many employers verify credit scores² before hiring a new employee.
Without a credit history, you may be considered a bad payer or even a risk for the financial institution and, therefore, it will be difficult to get a loan or a credit card in your name.
In the USA, in order to have, you must first owe
First of all, you are required to apply for a Social Security Number. Once you have it, you can apply for a secured credit card and start using it. This type of credit card is protected by a cash deposit made by the cardholder. This deposit works as a guarantee on the account, providing security to the card issuer in case the cardholder cannot make payments. That is the first step to build credit in the USA.
According to the American credit card system, every person starts with a low credit score. As they acquire debt and make payments on time, their credit score slowly gets higher. What many people don’t know is that in order to build credit in the US, you need to acquire debt. Since everyone arrives without a credit history, it is impossible to acquire debt. A high credit score is crucial for someone planning to live and work in the United States.
Your immigration status will never be included in the credit report. How long you’ve had your account helps prove your credit history and is an important factor to determine your credit score. Thus, it is a good thing to not close old accounts, as they help establish your credit and, if used correctly, help prove a positive history.
Here are some tips to help you build credit and increase your credit score:
- Pay rent on time.
- Pay bills on time.
- Do not apply for multiple credit cards with different banks. Each time you apply, the bank will check your credit score, and each time it is checked, you lose points and your credit score drops.
- Spend below your credit card limit.
- Do not make any late credit card payments, as those can also make your credit score decrease.
¹Payment system similar to rent. The person makes a monthly payment and exchanges her car model after a period of 2-3 years.
²Credit score is data representing the credibility of an individual in terms of paying debts. For Americans, the credit score is created from the Social Security Number (SSN), and for a non-US resident it is necessary to use the Individual Taxpayer Identification Number (ITIN).