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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

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  • Also related, although for a slightly different situation: money.stackexchange.com/questions/9669/…
    – littleadv
    Feb 16 at 17:41
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    How about buying a used car from your good salary, and not buying it on finance? Or is that an alien concept in the USA?
    – Simon B
    Feb 16 at 19:47
  • "good" but not as good as to buy a car on the first paycheck
    – marianov
    Feb 16 at 23:01
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    @SimonB Buying a car with cash doesn't send monthly updates to the credit agencies showing that you can manage your credit by paying on time so not as good for building a credit history in the US.
    – mkennedy
    Feb 17 at 15:17
  • @mkennedy true, but some people think you need to borrow lots of money, to build up a credit history, so you can borrow even more money, and pay ever more interest.
    – Simon B
    Feb 17 at 17:15

2 Answers 2

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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.

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    The last point is probably the most important. There is no way to build credit on the timescale the OP seems to be asking about. (OP mentions buying a car "on the first paycheck" in a comment.)
    – chepner
    Feb 17 at 13:32
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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.

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  • Banks have special treatment for students which they don't extend to immigrants. One reason is that students, while risky clients right now, have high future earning potential that the banks want to capture. Immigrants however is a blank slate and banks know nothing even statistically speaking. One can be a high earner software engineer and another maybe an undocumented cash-only under the table paid waiter.
    – littleadv
    Feb 17 at 4:38
  • Re paying bills on time - it does nothing to credit. Bills (utility/internet/phone/etc) are not reported to credit scoring agencies generally.
    – littleadv
    Feb 17 at 4:39
  • @littleadv I meant debt bills, not utility bills. Thanks for clarifying.
    – D Stanley
    Feb 17 at 14:51

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