USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

Canadian immigrants' credit records don't cross US border

By

Credit Care
'Credit Care' columnist Tanisha Warner
Tanisha Warner is the communications manager for Money Management International, where she manages educational content designed to teach consumers about personal finance topics. She writes "Credit Care," a weekly reader Q&A about debt issues, for CreditCards.com.

Ask a question

'Credit Care' archives

Question for the CreditCards.com expert Dear Credit Care,
My husband and I are Canadians and are moving to Washington. We were wondering what the best way of building credit in the U.S.A as newcomers is. We were thinking of applying for secured credit cards. Is this the best way to go about it? -- Rebecka

Answer for the CreditCards.com expert Dear Rebecka, 
You are absolutely correct that you will have to establish credit in the U.S. Unfortunately, your credit history from Canada will not follow you. You might think that with the two countries sharing a border and (mostly) a common language, that credit would flow between the countries' residents as easily as traffic through the Detroit-Windsor Tunnel. It doesn't. The main reason is that the laws for credit reporting are different in each nation.

As a newcomer to credit in the U.S., a secured credit card is a great way to begin establishing a positive credit history. The one feature you will want most on the card is that it will report your card activity from the card issuer to the three major U.S. credit bureaus: Equifax, Experian and TransUnion. That assures your good payment activity will be seen by other lenders. You might also look for a card that automatically converts to a standard credit card after on-time payments for 12 to 18 months. When you acquire and use the card responsibly each month, it will help you to build a positive credit history. Just as in Canada, if you make payments late or otherwise do not meet the obligations included in the card agreement, you will receive a negative listing on your credit reports. Needless to say, that will not help your goal to build a positive credit history.

Another option to build a positive credit history is a passbook savings loan. These loans are secured by your deposit with the bank issuing the loan and are installment loans that you pay back for a specific length of time (typically one to two years) at a set monthly payment. Because you are securing the loan to help build your credit, be sure to ask the lender if they report the loan to the three major credit bureaus. Should a lender not report the loan, move on to another lender until you find one that does.

Lastly, you may qualify for a store credit card. Retail credit cards are typically lower limit cards and are easier to obtain. You may find you want to purchase a large item like an appliance and apply for a card that allows you pay off the purchase without interest as long as it is paid off within the interest free period (typically 12 to 18 months). This would allow you to make payments monthly on your balance without accruing any interest and adding positive information to your credit report. If you decide to purchase something using a card with an interest free period, be sure to pay off the balance before the period ends. If you don't, you will be charged interest from the first day of purchase.

One last thought is to approach a lender with copies of your Canadian credit reports (assuming, of course, that you have a positive credit history in Canada) and see if the lender would be willing to lend to you based on your positive Canadian credit history and your ability to repay the loan. If you are willing and able to make a sizable down payment on a loan, this approach may work for you to get your U.S. credit report kick-started.

Handle your credit with care! 

See related: Will there be a global credit score someday?

Tanisha Warner is the communications manager for Money Management International, the largest nonprofit, full-service credit counseling agency in the United States. She manages educational content designed to teach consumers about personal finance topics. You can find more money management advice on Blogging for Change and MMI's Facebook page.

Credit Care answers a question about a debt or credit issue from a CreditCards.com reader each week. Send your question to Credit Care.

Published: September 10, 2012



Join the discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Three most recent Credit Care stories:

Share This Story




Follow Us!


Credit Card Rate Report

Updated: 12-20-2014

National Average 14.92%
Low Interest 10.37%
Balance Transfer 12.73%
Business 12.85%
Student 13.14%
Reward 14.90%
Cash Back 14.94%
Airline 15.52%
Bad Credit 22.73%
Instant Approval 23.33%

ADVERTISEMENT
ADVERTISEMENT