How Immigrants Can Build Credit in the US with No Credit History: A First-Year Plan

Why does an immigrant's credit history in the US start from zero?

Back home, you may have had a mortgage and ten years of payments without a single late one. An American bank will not see any of that. Here, credit histories are kept by Experian, Equifax and TransUnion, which are called credit bureaus. Only US banks and other lenders send data to them.

That is why, in your first months, the system sees you as “credit invisible.” You are not a bad borrower: there is simply no data about you. And a bank decides whether to give you a card based on your credit score, a number from 300 to 850. The score is calculated from the records at the bureaus, and you do not have any yet.

You cannot automatically transfer your credit history from back home. Partial options exist only for some countries, and not all lenders accept them.

Your history is built by the same rules as for people born here. Only the start is different: new documents, and old habits that get in the way here. Excalibur Credit Solutions managers watch it happen over and over: when someone pays carefully, a working credit history usually takes shape within a year. The key is not to lose the first months.

What documents does an immigrant need for their first accounts?

The bank and the bureaus need to know that you are really you. For that, you need a number, a photo ID and an address.

• SSN: your Social Security Number, the main number for banks and bureaus. People who have the right to work in the US get it: with a green card or a work permit (EAD).
• ITIN: a tax number. People use it while they do not have an SSN. You can build credit with it too, but fewer banks accept it. How it works is explained in our article about credit with an ITIN and no SSN.
• Photo ID: your passport, green card or work permit. Over time, get a state ID or a driver's license: a US document solves a lot of problems.
• Address: a lease, an electric bill or a bank statement in your name.
• Phone: a US number, ideally in your name. Your bank sends verification codes to it.
• Income: pay stubs, the pay slips from your employer that show what you earned.

Your SSN stays with you for life. If your status changes, your credit history does not reset and keeps growing under the same number.

Month 1: where to start with a bank, an address and a phone

The first month is not about credit, it is about the foundation. The bank needs to see that you are here to stay.

1. Open a regular checking account at a big bank or a credit union near your home. A credit union is like a bank, but it is owned by its own customers. Many banks will open an account even before you have an SSN, with a passport and a second ID, so ask at the branch.
2. Ask your employer to send your pay straight to this account. This is called direct deposit. Regular deposits are your best argument when you ask this bank for your first card.
3. Pick one address and one phone number, and list them the same way everywhere.
4. Choose one spelling of your name in Latin letters, the same as on your Social Security card. If your passport says Olesia and an application says Olesya, the bureaus may get confused about whose data it is.
5. Remember the US date format: month first, then day. 03/07/1990 means March 7, not July 3. A mistake in your date of birth can derail an identity check.

Months 2–3: how do you get your first card?

Now you need your first credit account, one that the bank reports to the bureaus every month. For most people, that is a credit card.

Start with the bank where your paycheck goes: it sees your income and is more willing to take a chance on you. If you were turned down for a regular card, like Olesia, it is not the end of the world. Ask about a secured card, a card backed by a deposit. Olesia deposited $400, and that became her limit. On a credit report, this kind of card looks just like a regular credit card. If you are not sure where to start, see our comparison of a secured card, a pledge loan and a credit builder loan.

Which card to get first is covered in detail in our article about your first credit card. For a comparison of popular cards, see our guide best credit cards in the US.

Months 4–12: how do you grow your credit history?

Your card is open. From here, what grows your history is not how much you buy, but how carefully you pay.

• Use the card for 1–2 regular expenses: your phone bill, a subscription, gas. $30–$60 a month is enough.
• Set up autopay for the full statement balance (the monthly bill for your card), so no interest builds up.
• Make sure that by the statement date, your card balance is under 10% of your limit. With a $400 limit, that is no more than $40.
• Never be 30 days or more late with a payment: a late payment like that stays on your report for up to 7 years.
• Don't close your first card, even when better ones come along. It is your oldest account.

FICO is the most common scoring model, and many banks look at it. This score usually appears when your card is about 6 months old. Free apps show a different score earlier: VantageScore. Around month 9–12, you can ask to switch your secured card to a regular one, raise your limit or open a second card.

You can speed up the start if someone close to you with an old card in good standing adds you as an authorized user. The age and limit of their card will show up on your report. Credit boost at Excalibur Credit Solutions works differently: you are added to a verified credit line for just two reporting cycles, which is about two months. It is a paid service, it requires an SSN, and it is usually done for a specific application. After that, the line drops off your report. Only your own cards and loans build a lasting credit history.

A step-by-step plan for everyone starting from zero is in our article How to Build Credit History from Scratch in the US: A Step-by-Step Plan.

What mistakes do newcomers from our countries make in their first year?

Some of our habits from back home work against us in America. Here are the most common ones.

• “I only pay with cash and a debit card.” Honest and debt-free, but to the bureaus you do not exist. You can live like this for five years and still have no score.
• “Borrowing money is shameful.” A credit card you pay off in full every month is not debt: it is a way to show the bank you are responsible. And you do not pay any interest.
• “I'll leave a balance on the card so my history grows faster.” This is a myth. Your score grows from statements paid on time, not from interest you gave to the bank.
• “We'll put the car in my brother's name.” A loan in a relative's name builds credit for them, not for you. And if payments slip, their credit takes the hit, and so does your relationship.
• Schemes from Telegram groups. A “credit number instead of an SSN,” a CPN, a “ready-made credit history for $1,000,” “we'll open an account in a friend's name”: all of this is fraud with serious consequences. And never give your SSN to acquaintances so they can “put something in your name.”
• A store card at the register for a discount. This is also an application and a hard inquiry, and it stays visible on your report for 2 years. Start with one main card.
• Going to visit family for the summer and forgetting about your card. A $25 payment is missed by more than 30 days, and now there is a late payment on your report. Check your autopay before you travel.

Where else your credit history matters: renting, phone service, jobs

In the US, it is not only banks that look at your credit history. Without one, you end up paying extra for many things.