As an international student, building credit in the United States can be challenging. Most credit cards and loans require a credit history, which you may not have as a newcomer. However, building credit is essential for financial stability and can help you qualify for future loans and credit cards. Here are some steps to take when building credit as an international student.
1. Apply for a secured credit card
A secured credit card is a credit card that requires a security deposit. The deposit is typically equal to the credit limit on the card. Using a secured credit card can help you establish credit as an international student. Make small purchases with your secured credit card and pay the balance in full each month. This will show creditors that you can use credit responsibly.
2. Become an authorized user on someone else’s credit card
Another option for building credit as an international student is to become an authorized user on someone else’s credit card. This means you can use their credit card, and the payment history will be reported to the credit bureaus under your name. Make sure the person you become an authorized user with has good credit and pays their bills on time. If they miss a payment or default on their credit card, it will negatively impact your credit score.
3. Open a bank account
Opening a bank account can help you establish a relationship with a bank and build credit. Some banks offer credit-builder loans, which are small loans that are designed to help you build credit. The loan amount is typically deposited into a savings account, and you make monthly payments to pay off the loan. The payments are reported to the credit bureaus, which can help you build credit over time.
4. Pay your bills on time
Paying your bills on time is crucial for building credit as an international student. Late payments can have a significant impact on your credit score. Set up automatic payments for your bills to ensure you never miss a payment. If you can’t make a payment, contact your creditor and explain your situation. They may be willing to work with you to create a payment plan.
5. Apply for a student credit card
Some credit card companies offer credit cards specifically for students, including international students. These credit cards typically have lower credit limits and fewer rewards than traditional credit cards. However, they can be an excellent way to establish credit as an international student. Look for a credit card with no annual fee and a low-interest rate.
6. Use your credit card responsibly
Using your credit card responsibly is essential for building credit as an international student. Make small purchases with your credit card and pay the balance in full each month. Avoid carrying a balance on your credit card, which can lead to high-interest charges and more debt. Use your credit card for purchases you would make anyway, such as groceries or gas.
7. Monitor your credit score
Monitoring your credit score is crucial for building credit as an international student. You can obtain a free copy of your credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion, once a year. Review your credit report for any errors or inaccuracies, such as accounts you didn’t open or payments that were reported late. Dispute any errors with the credit reporting agencies to ensure your credit report is accurate.
In conclusion, building credit as an international student can be challenging, but it’s essential for financial stability. Apply for a secured credit card, become an authorized user on someone else’s credit card, open a bank account, pay your bills on time, apply for a student credit card, use your credit card responsibly, and monitor your credit score. With persistence and dedication, you can establish credit as an international student and qualify for future loans and credit cards. Remember, building credit takes time, but the effort is worth it.
