Building Credit History in USA

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I’ve been visiting USA for many years now. While I was a kid, my parents gave me a few dollars to expend in our trips and I had to choose what to buy. That was a learning experience.

Using cash gives us a way to see how we can afford and what not. Having only cash will present a ‘buying process’ that sometimes is missing when you use a card to buy things, first you need to have the money available, then you have to carry the money with you, see if we can afford what we want, buy the product, keep the rest of the money somewhere to use it in other place.

Using a card to buy things makes everything easier (debit or credit card), you want something and you present the card and sign for the product, the only limitation is that the card may not have enough limit to buy something, but that’s it. With credit card is worse, you have to figure out a way to pay for many things you bought that you really didn’t need them.

I grew up and then used my credit cards in the USA, because my cards were from Mexico I have to buy things in dollars, then the bank converts the currency to pesos, then I paid the statement on the due date. My cards from Mexico do not have a FTF (foreign transaction fee), in other words, they don’t charge extra to convert dollars to pesos, and some banks give you the official rate that many times is cheaper than first buying dollars in cash to use in your trips.

I’ve been living in the USA for more than 2 years now and experience first hand the need to have a decent credit history there. Many things that you want to buy require them to check your credit history, things like:

  • Cellular plan
  • If you want to rent an apartment
  • You want cable or internet
  • Buy a car
  • Get a house
  • Get 0% interest for several months buying things

I didn’t know how credit history worked in the USA, so my guess was that only people with SSN (Social Security Number) can create credit history there. The reality is that people with no SSN can create credit history. They will be limited in products they can get to build credit history but it is possible.

The usual way to build credit in the USA
When students or temporal workers from other countries go to USA they get a SSN by working on campus or in an approved place, after that they can use that number to get credit. To do this, they need to do the following:
1.- Get a Visa (usually F1/J1 for students, H or other workers)
2.- For students they need to get an offer to work so they can get the SSN
3.- Once you have the SSN you can start building your credit history

Process for people that can’t get SSN
I learned that some people living in the USA can’t get a SSN (like dependents of F1 visa holder, they enter the country with F2 visa). Some of them can get an ITIN (Individual Taxpayer Identification Number). If they can get this number the process is like this:
1.- Enter USA with your temporal visa (F2 or other)
2.- Fill the forms/paperwork and get an ITIN
3.- Use the ITIN number instead of SSN to get credit

SSN is the number used to identify all people in USA. They ask for this number every time you request credit. With ITIN you can get credit too, but some lenders will not give you credit if you don’t have SSN, others will not give you credit even if you have SSN but are in the USA temporarily, only citizens or permanent residents can apply for credit at some places.

People with ITIN use that number in place of SSN when requesting credit. Both numbers are 9 digits long divided in 3 groups, first group 3 digits, second group 2 and the third group 4 digits, with format XXX-YY-ZZZZ. ITIN always start with 9 and SSN utilize others numbers and never number 9. ITIN number is only given for 5 years and SSN number is assigned forever.

If you only can apply for ITIN you will find that: 

  • some banks will not give you credit with it, only SSN
  • because ITIN start with 9 many only applications will not work
  • as SSN is what is more used, if you want to check your history it is harder to ask the bureaus for your report, you can’t do it online, you need to send regular mail with your request
  • credit monitoring services only work when you have SSN

A few months ago, I found out that you don’t need SSN or ITIN to start building credit in the USA. There are a few banks that can give you credit without those numbers. The minimum information they report to the credit report agencies is:

  • Name
  • Date of birth
  • Address in USA

There are a few banks/institutions that give credit to people living temporarily in the USA. This because they present a higher risk than people with strong ties in the country.

Bank of America logoBank of America can give credit to people without SSN or ITIN. The product they offer is a “secured credit card”. This is card is different from a regular credit card and also different from a debit card. I didn’t know this product existed, because I never knew about it until recently.

Basically you apply for a credit card but you are required to give to the bank the amount you want to be your limit. The bank put that money into an account that you can’t touch as long as your card is secured. I guess the bank will use the money in the event that the person leave USA without paying the card. So this product presents a minor risk for the bank.

For people without SSN or ITIN that want to start building credit history, you will need a) passport, b) visa, c) address in the USA and d) deposit the money you want for your limit.

In a future article I’ll publish more information about the Bank of America Secured Card.

In your country do banks offer secured credit cards? Do you want to build credit history in the USA?