How To Establish Credit As An Immigrant
This article is about establishing credit I learned it the hard
way
Spring 1997 I had moved from Germany to the USA around
Christmas and enjoyed my first Southern Californian year While
I browsed the www, I saw some ads for credit cards, clicked on
them and was thrilled by the nice designs They were issued by
First USA and I was given a choice of nice pictures of them I
saw one with a nice winter landscape and wanted to have it
It was so easy type in social security little did I know
what I started
Nothing happened and a week later I saw a pretty card that
featured motives from the business world, looked cool, so
applied for that one too
A few weeks went by and I got two letters saying something like
“insufficient credit history”
I did not really need such a card, because I still had a
Mastercard issued by my bank in Germany The inconvenience of
that card is that they charge me 1% on all expenses made in a
foreign currency and I have to pay it off from my account back
in Germany
After getting those two letters, my sports spirit came out, I
went on the web again and had no problem applying again 
Another letter came soon
What had I done wrong? I did not understand it I had lived in
Germany financially stable and was used umm to be given a
chance I knew someone in San Diego who had never had a job in
the entire life but qualified for a card by their bank I did
own a home in Germany with rental income, I never had had any
problems with banks before
So I asked my friend who worked back then in a collecting agency
(she has her own finance brokerage business now) She yelled at
me ‘how could you be so stupid???’
* I had my address for 3 months only
* I had my job for 3 months only
* there was no record what I had done before and where I lived
before
* I had applied for several cards within short time
‘In other words’, she told me, ‘everything is wrong
with you You are bad credit Yuck, will I catch that over the
phone line?’
What is important?
* Stability (same job and address over years)
Difficult for immigrants
* Regular payments towards existing creditors
Well, I had none My 4 successful phone bill payments did not
count Since nobody would lend me money, I figured, how could I
have creditors?
My friend recommended me to get a Target (department store) card
and wait before I reapplied for a regular credit card
I followed her advice and Target indeed qualified me for a $200
line I forgot about the cards for a few months, since I was
doing fine without one I used my ATM card all the time no
problems
More than half a year later I wanted to purchase airline tickets
online and was to cheap to give my German bank that 1% fee for
currency exchange So I re-applied did not work My friend
had not told me that I actually had to use that department store
card
* You need to BORROW FIRST to be respected by a bank
My friend then told me to get a Secured credit card
I did this with my local credit union They agreed with my
friend’s statements that this would help me build credit I
deposited $500 and got a credit line of $500 My friend told me
about secured cards that have a 1:2 or a 1:3 ratio (1:3 means
that if you deposit $500, your credit line is $1500)
I did not really care that much and used the card frequently
Less than a year later, I applied for an unsecured card (www
again) and got approved
End of story
Here is some common sense
* do not bounce checks
* do not make late payments (phone, utilities) They will
report if you are a bad customer, but they will not report, if
you are a good customer
* do not apply for credit frequently It makes you look
desperate This includes applications at xcom Basically
everybody who requests your social security number is suspicious
* do purchase things on payments
I hate this advice! Upon arrival in California, I had bought a
12-year old car and paid cash Big mistake Buying a car is a
good way to get a creditor
* Know that Discover card is useless to build credit
Like utilities, they will report to the agency only the bad
customers but not the good ones
A list of creditors for the beginner
* secured credit card – this worked best for me It has a real
value
* department store card
no deposit needed, limited use (I did not visit that store very
often)
* gasoline charge cards
easier to get than real credit cards and useful
* buy your car on payments
I don’t know whether that dealer would have sold me on payments,
but for immigrants who need a car anyway, it’s worth a try
Good luck!
Tags | banks, brokerage, business, californian, credit, currency, foreign, history, inconvenience, landscape, motives, result, social, spirit, winter
Comments are closed.