US immigrants: What to know about bank accounts and credit cards
If you’re trying to purchase a car, find an apartment, or purchase a home, a credit score is an essential part of that process. As an immigrant you may be eligible to apply for credit or open a bank account.
Here’s a guide to understanding what to know about bank accounts and credit cards.
Starting a credit history
One of the biggest hurdles to cross is wanting to obtain credit but not having any credit history. In order to start a credit history, an institution will have to provide you with a credit card or some other type account, which can help you to establish credit. However, if you don’t have credit, how do you get it?
You can apply for a credit card or bank account online or in person. It’s generally suggested that you go into a branch or other financial institution as they can usually address immigrant concerns as they relate to building (and applying for) credit. Both banks and credit card companies ask for personal identification information. The most commonly requested ID is a Social Security number.
The myth of Social Security numbers
Although most financial institutions ask for a Social Security number, it is not mandatory to open a credit card account. Many banks are willing to permit alternative forms of identification. The US Patriot Act requires name, date of birth, residential or business street address in the United States, and an identification number.
For immigrants, more options are becoming available when seeking financial services, regardless of status. This means that even undocumented immigrants can have access to credit accounts.
Common problems immigrants face
As an immigrant living in the United States, applying for credit or opening a bank account in the US can seem daunting at first. In the short term, it’s easier paying for items in cash and using your local check cashing establishments; however, the fees can add up.
That’s why some individuals choose credit unions over large financial institutions. One of the advantages of a credit union is the flexibility they offer. As with any accredited bank, you can open a checking or savings account at a credit union. However, credit unions are typically nonprofits and often offer lower interest rates. Community Development Credit Unions have programs suitable for lower-income individuals and immigrants, and it’s a good idea to look into the credit unions in your neighborhood to see if it might be a good fit.
The road to good credit
Once you have a credit card (or other credit establishing account) it’s important that you pay on time and, if possible, pay more than the minimum balance required. Additionally, if you’re trying to build a good credit record, you might consider opening a secured credit card. The card acts as a savings account in that what you put on it is what’s actually available. While the secured credit card company won’t extend credit to your account, they will report payments to the credit bureaus, which will help you to establish a good credit history.
A FICO credit score is the most common measurement of credit scores, which typically range from 300 to 850. Your credit history is tracked by three major companies: TransUnion, Equifax, and Experian. Some companies offer free credit reports once a year.
Other available services
Another way to keep your money safe is to use a reloadable prepaid card. Reloadable prepaid cards are also a way to keep your money safe, but they do not help you build credit.
It’s important as you build a credit history to check on its progress. While immigrants may have more steps to go through when building credit, it is attainable for both documented and undocumented immigrants.