What's the fastest and most cost effective way to build credit as a newly arrived immigrant with a good income?

Question

What's the fastest and most cost effective way to build credit as a newly arrived immigrant with a good income?

Context: I'm emigrating to the US under an L1 visa and will have a good salary in a big company. Don't want to pay high interest when buying a car.

I wonder what's the fastest/best way to build credit in my situation.

I'm told that:

• I need to be in the US for 10 days to ask for a SSN
• I need a SSN to build credit
• I could build credit by either financing a car with an awful interest rate or asking for a secured credit card.
• Chase and other big banks do not issue secured credit cards
• Opening a US bank account with my passport alone will not help me build credit.

Is this all true?

My initial concern is about having proper credit history to buy a car and not have to rent a car for months, which is a huge sunk cost.

Thanks

Answer 1

I need to be in the US for 10 days to ask for a SSN

You'll get it faster if you wait a bit because of the delay in updates between CBP/USCIS/SSA, but technically you can apply for it on the day you land.

I need a SSN to build credit

You need SSN for a lot of things, including tax reporting. Your employer may not be able to pay you salary (if you're paid in the US) until you have it, because they won't have a TIN to report your withholdings. But yes, it is also used as an id for credit reporting.

I could build credit by either financing a car with an awful interest rate or asking for a secured credit card.

Yes. Financing a car can be a car loan or a car lease. Secured credit card would generally require you to put you a collateral with the bank.

If you have an American Express in your home country, you can also try their "Global Transfer" program.

Your employer may also have agreements with some banks/credit unions which can help you get credit cards (even unsecured) based on your job offer/salary in lieu of credit.

Chase and other big banks do not issue secured credit cards

Really? I don't know about Chase, but others definitely do. Try Wells Fargo, CapitalOne, Discover, Citi, Bank of America - just to name a few.

Opening a US bank account with my passport alone will not help me build credit.

Bank account doesn't provide you credit, so it doesn't get reported (to credit scoring agencies, it is reported to a different system).

My initial concern is about having proper credit history to buy a car and not have to rent a car for months, which is a huge sunk cost.

It would take about a year to build an initial reasonable credit profile. I'd suggest buying a used car instead of renting/leasing, as a more cost-effective measure.

Answer 2

You do not need to spend money on interest to build credit. I can't say how easy it or hard it is for an immigrant to get an unsecured credit card, but I know that high school graduates can get one with no credit history so I don't know why it would be any harder (other than maybe the risk of "flight").

Building credit takes time - period. You can't "buy" a good credit score. Pay your bills on time (paying no interest) and you'll be fine.

If you need a car and can't get a good interest rate, then get the cheapest car you're comfortable with to pay as little in interest as possible (meaning not just the rate, but the shortest loan). Pay it off as fast as you can and keep it until it dies, saving money for the next car. A $5,000 car will build your credit just as much as a $20,000 car with a lot less interest.

You also don't have to borrow from the dealer. Talk to a local bank and see if they can get you better terms on car loans if you open an account there. "No credit" auto lots are notorious for incredibly bad credit terms and higher prices. Their strategy is to plan for you to default so that they can repossess the car, charge you for the difference anyway, and then resell it. Find a local lot or individual car and don't finance with them - get pre-approved for a loan from a bank and negotiate on the total purchase price, not the monthly paymernt.