Credit Scores and Reports

Canadian immigrants’ credit records don’t cross US border


Auto traffic may flow smoothly over the U.S.-Canada border, but a new immigrant from the north to America finds credit ratings don’t cross the border

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Question for the expertDear 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 expertDear 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?

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