Tips for immigrants building a U.S. credit history
Immigration means starting over with credit, but there are shortcuts
America lures many who dream of living better. But when immigrants arrive, their credit histories rarely make the trip.
Jeroen Baert, 39, moved to Atlanta from the Netherlands, where he had excellent credit. When he opened a bank account with a large national bank in the United States, he was stunned that the institution was unwilling to give him a debit card.
"I had just deposited money in the account. They could see that I had cash to be withdrawn," Baert says. "But they wouldn't give me the card."
He had a similar problem when he sought to buy a small car. "I went to two or three different dealerships," he says. "None were interested in leasing me a car."
The problem was that lenders had no way to access Baert's existing credit report back in the Netherlands. "Cross-border data laws often keep credit information from a foreign country from being exported to the United States," says David Rubinger, spokesman for Equifax, one of the United States' three credit reporting agencies.
Data privacy and consumer protection laws make it illegal for some countries to share credit information with lenders outside their borders. Even where privacy laws do not apply, the differences in credit reporting standards and formats make the information difficult to share internationally.
And yes, if you are well-established in America and want to move to another country, the same thing happens: Moving from America means you leave your credit score behind. Expatriates from the United States have to start over, creditwise, too.
Lack of access to foreign credit reports
Linda Sherry, director of national priorities at Consumer Action, a consumer advocacy organization, says that without access to that credit history, lenders may be reluctant to offer credit.
"A credit history gives lenders an assessment of the risk of you repaying the loan," she says. "If you have no credit history, or the lender can't access that history, it's a major risk."
Lenders do not contact credit reporting agencies in an applicant's home country, even when laws do not prohibit the sharing of credit information. James Jones, consumer education manager at Experian in the United Kingdom, says that currently there is no system or procedure to transfer the information between reporting agencies and lenders in different countries.
"I know these issues have been looked at a few times. And they continue to be looked at. But at this time there is nothing in place to share that kind of information," says Jones. "The onus is really on the individual to find a way to bring that history to the lender."
Credit histories, though commonly used, are not the only criteria for securing credit. It is possible for foreign nationals to beef up their American credit history by approaching credit applications from a slightly different stance.
Tips for establishing credit in the United States
• Talk to your lender. Jones suggests that you call any lender and explain your situation before submitting an application. "It's always good to have a conversation with the lender," he says. "There are procedures for dealing with your application manually. And yes, they may say that they are unable to help. But that saves you a wasted application and an unnecessary search on your local credit report." Some lenders may be willing to offer credit with income verification from your employer, other documents pertaining to your financial history or a large enough down payment or deposit. But you won't know until you ask.
• Take a hard copy. Jones also recommends having a hard copy of your credit history, translated into English when necessary, to offer to lenders. With that information in hand, lenders may be willing to attempt to verify information and help position you on the credit ladder.
• Talk to your employer. Your employer may be able to help you establish credit, especially if the company is accustomed to doing business internationally. When Baert relocated from the Netherlands to Atlanta, a co-signed application from his company got him the debit card he was originally denied. Talk to your human resources department to see what options may be available for foreign employees looking for assistance in establishing credit in the United States.
• Talk to companies with which you already deal. When Baert was unable to lease a car from an American dealership, he went to BMW. "I had driven a BMW before, and their financing department was able to check my record with BMW in the Netherlands," he says. If you've already established a relationship with a lender or other international organization in your home country, you may be able to leverage that history when applying for a new credit line.
• Be patient. It doesn't take as long as you think to build up credit in the United States. By establishing a bank account and good practices with credit products, lenders will be more likely to take a chance on you.
Sherry recommends that newcomers obtain a secured (prepaid) credit card. "Over time, the use of that secured card will show up on your credit report and show lenders that you are reliable."
Within a year or two after moving to Atlanta, Baert had no difficulty finding lenders willing to extend him credit. "When I first moved here, I had trouble getting a credit card. But then only two years later, I was being offered 10 different platinum cards."
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