Needing U.S. Credit History to Get A Personal Loan
Many non-U.S. Citizens (including H1b visa holders) in the United States need loans such as personal loans, refinancing education loans, or an auto loan. If you fall into this category, you may have been able to get those products back in your home country but are now facing difficulty finding them in the United States.
Many non-U.S. citizens realize the following chicken-or-the-egg conundrum:
- They can’t get a personal loan or credit product because they do not have a U.S. credit history.
- But the only way to build up a credit history is to get a personal loan or credit product in the U.S.
The good news is that many international visa holders do find credit products and that there is a way to get them.
In fact, we detailed the options for non-U.S. citizens getting personal loans or refinancing their education loans.
Why does credit history matter?
Credit history shows a prospective lender your past ability to pay back your credit.
- This history forms the basis of your credit score, which lenders then use to determine how risky it would be to give out a loan to you.
- If you don’t have credit history, it can be very hard for a U.S. lender to lend to you.
The problem for new international arrivals to the United States is, while you may have credit history back in your home country, you don’t have a U.S. based credit history, which is what U.S. lenders look at.
Even if you don’t currently plan to take out a personal loan, or plan to refinance your education loans, having credit history will open options to you if the need arises.
It is something that takes time to build, so it is better to be safe than sorry.
How to Start Building Credit? Get a Secure Credit Card
One way to start building credit is to use a secured credit card.
- A secured credit card requires you to put down a security deposit and then get a line of credit that is typically the same amount as your deposit.
- With timely payments, the issuer will allow you to change to an unsecured credit card.
Make sure your payment history is being reported.
- Before you apply for your secure card – ask the lender whether your payments will be reported to the credit reporting agencies.
- Most do, but it is good to be sure, especially as if you are getting the card to build up your credit history.
- This is important as lenders will look up your history from these agencies in future personal loan applications.
Getting a Bank Account May Be Helpful
While getting a bank account, checking account or savings account won’t build your credit, it can help you get other credit products.
- Many banks offer secured cards among other credit products
- Building a relationship with a bank can help you build trust so they are more comfortable lending to you down the road.
- You may be able to take out a starter personal loan with a bank to help you build your credit.
Different bank accounts will require different things but typically, you will need:
- Name, Address, Date of Birth and an ID number – Social security number or Taxpayer identification number.
- Being a U.S. citizen is not a requirement.
Check Your Credit Score
After you’ve been paying your secured credit card bill off on time, you will want to request a copy of your credit report from Experian, Equifax, TransUnion, the three major credit reporting agencies.
- Check to see if your payments are showing up and that they are accurate.
- You can get one free report once a year from each agency
Credit reports contain your payment and borrowing history, and a score that shows how likely you are to pay back debts on time.
- This score will prove to be important as future lenders, potential landlords, and employers may pull this score when determining your creditworthiness.
Manage Your Payments and Balances
It is important to be financially sound and smart with your money as most, if not all, financial decisions will affect your credit report.
Some tips to do so are:
- Make sure you pay your balances on time and fully.
- Make sure you have a low balance – a large amount between the balance on your card and the credit limit allowed. This may help your credit history.
Alternative Ways to Establish Credit
If you do not have a U.S. credit score, there still may be a way to for a lender to determine your creditworthiness to get a personal loan or to refinance your education loan:
- Some lenders will look at alternative methods to qualify for a loan.
- Rent payments, phone or utility bills, tuition payments, etc.
- This is not a guarantee, and may result in a higher interest rate than a loan given with traditional underwriting.
- It will help if you can provide documentation and proof of how long you will be able to remain in the country. A statement from your employer or sponsor could be useful.
Nomad Credit Can Help
At Nomad Credit, we can help you find personal loan and education loan refinancing options as a non-U.S. citizen (including H1-B visa holders) as well as answer any questions or concerns you may have while trying to attain loan products while in the United States.
If you have any questions, send an email to email@example.com and we will happily help!