Lori Meadows
As an international student, building a good credit score is essential to accessing financial opportunities in the US, such as better rental agreements, lower insurance premiums, and improved loan interest rates. A credit score can also impact rental applications, utility setup, job offers, and even phone plans. Fortunately, international students can take several steps to build and monitor their credit scores. This includes opening a secured credit card, making timely payments, and keeping credit utilization below 30%. Additionally, international students can check their credit scores through services like Experian, Equifax, and TransUnion, which are the three main credit bureaus in the US. Many banks and financial institutions also offer free credit score access, enabling students to track their credit-building progress. By understanding the factors influencing their credit score and practicing responsible financial habits, international students can effectively manage their credit profiles and improve their financial health.
| Characteristics | Values |
|---|---|
| How to build a credit score | Open a secured credit card, make timely payments, and keep credit utilisation low (ideally below 30%) |
| How to check a credit score | Check through services like Experian, Equifax, and TransUnion; many banks and financial institutions also offer free credit score access |
| Importance of a good credit score | Opens doors to financial opportunities, including better rental agreements, lower insurance premiums, and lower interest rates on loans |
| Impact of a credit score | Plays a role in rental applications, utility setup, job offers, and even phone plans |
| Credit score for international students with no credit history | It usually takes six months or so of financial activity to generate a FICO score |
| Impact of bank account on credit score | Having a bank account will not improve your credit score, but it will help you manage your finances effectively and make payments on time |
| Impact of unpaid bank fees on credit score | Unpaid bank fees or penalties will be reported and will negatively affect your credit score |
| Impact of missing payments on credit score | Missing payments will negatively affect your credit score |
| Impact of credit applications on credit score | Avoid too many credit applications as it can negatively impact your credit score |
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What You'll Learn
Credit card usage
Credit cards are now used as widely as (if not more than) cash in the US, making it almost obligatory for international students to own one. Using a credit card responsibly is a simple way to build and maintain a good credit score.
International students can start building a credit score by opening a secured credit card, making timely payments, and keeping credit utilization low (ideally below 30%). It is important to note that unpaid bank fees or penalties will be reported and will negatively impact your credit score. Therefore, it is advisable to read the terms and conditions of any account opened to understand all potential bank fees and penalties.
One way to build credit through a credit card is to use it for daily purchases and pay off charges each month or week. This allows for regular use of the card and steady payments, which lenders like to see. To ensure you never miss a payment, create an automatic payment for the minimum due each month, and then manually pay the difference.
Another way to build credit as an international student is to become an authorized user on a sibling's credit card, provided they are responsible with their credit card use. However, keep in mind that a joint card means shared responsibility for any positive or negative impact on the credit score.
Finally, it is important to monitor your credit report and score to ensure your efforts are paying off. You can request a free copy of your credit report on a weekly basis from each of the three credit bureaus (Equifax, Experian, and TransUnion).
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Payment history
To keep your accounts in good standing, make at least the minimum payments on time on all your credit accounts. To build your score, pay on time and use less than 30% of your credit limits on all accounts. A few late payments are not an automatic "score-killer". An overall good credit history can outweigh one or two instances of late credit card payments. The older a credit problem is, the less it counts toward your credit score. So, the longer you pay your bills on time, even after a few late payments, the more potential for your FICO score to increase.
As an international student, you can build your credit history and, thus, your credit score. The first step is to get a credit-building account. Many students do not have a lot of credit built up and do not own houses or have credit cards. The first step is to find a bank and see if you can get a credit card. It is important to be on an account that is regularly paid. One of the easiest ways to get a higher credit score is to continually make payments on time.
Credit cards are now used as widely as (if not more than) cash in the US, making it almost obligatory to own one. Not having a credit card can make it difficult, if not impossible, to do certain things like buying things online or renting a car. The best way to build credit with a credit card is to use it for your daily purchases and pay off your charges each month or week. This will allow you to have regular use of the card and steady payments—both of which lenders like to see. To ensure you never miss a payment, create an automatic payment for the minimum due each month, and then manually pay the difference.
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Credit bureaus
Each of the three credit bureaus offers slightly different services, and lenders may not report to all of them. As a result, the information on an individual's credit report can vary across agencies, leading to different credit scores. This is why it is important for individuals to review their credit reports regularly to ensure accuracy and identify any discrepancies. Individuals can request free copies of their credit reports from each of the three credit bureaus through websites like AnnualCreditReport.com.
For international students in the United States, building credit is essential. While simply having a US bank account will not impact an international student's credit score, responsible use of a credit card can help build and maintain a good credit score. Additionally, becoming an authorized user on a sibling's credit card can positively impact their credit score, although it carries joint responsibility for any credit impact. International students can monitor their credit reports and scores to ensure their efforts are paying off and make any necessary adjustments to their financial habits.
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Credit monitoring services
There are several free credit monitoring services available that can help you check and monitor your credit score over time. These services can also protect your personal information from cybercriminals and alert you if your identity has been compromised.
When choosing a credit monitoring service, look for one that monitors reports from multiple credit bureaus, as this will give you a more comprehensive view of your credit history. The three main credit bureaus in the US are Equifax, Experian, and TransUnion. Services that offer FICO scores are also preferable, as this is the credit scoring model used in 90% of lending decisions.
Some credit monitoring services also offer additional features such as dark web scanning, identity theft insurance, and social media reports. These features can provide extra protection and help you identify potential threats to your personal information.
- Experian IdentityWorks: This service offers a free tier with features like FICO score tracking, Experian credit report monitoring, and dark web scanning.
- Aura: Aura offers a family plan that can be shared by five adults and an unlimited number of children and devices. It includes credit monitoring for Experian, Equifax, and TransUnion credit reports, as well as identity protection and total protection plans.
- CNBC Select: CNBC Select has a range of credit monitoring plans that are ranked based on affordability, security, identity recovery assistance, and other factors.
By using a credit monitoring service, you can track your progress and watch your credit score improve over time as you establish your financial history in the US.
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Student loans
As an international student, you won't have a US credit score when you first arrive in the country. However, building a credit score in the US is important and will help you in the long run. A good credit score can help you secure an apartment, buy a car, or even get a job.
Private International Student Loans
Juno offers two deals on refinancing international student loans as well as private international student loans, including one for borrowers without a co-signer. While having a co-signer can increase your chances of getting approved for a loan, it may not be an option for everyone. In such cases, you can opt for a non-co-signed loan.
Secured Loans
Also known as credit-builder loans, secured loans are another option for international students. Instead of receiving the loan amount upfront, you make fixed payments to the lender, who holds the money in a bank account until the end of the term. Your payment activity is reported to the US credit bureaus, helping you build your credit score.
Some lenders, such as Ascent, offer student loans without a hard credit check. Ascent offers undergraduate and graduate student loans funded by banks, with flexible repayment options for international students.
Store Credit Cards
Store credit cards are typically easier to get approved for than general credit cards. They are offered by many national retailers and can help you build your credit score. However, keep in mind that store credit cards usually have lower credit limits, and missing payments can negatively impact your score.
Authorized User on a Credit Card
Becoming an authorized user on someone else's credit card can help build your credit score. As an authorized user, you'll have your own credit card tied to the primary cardholder's account. Ideally, your credit score will increase as long as the primary cardholder makes timely payments.
While building credit as an international student may take time and effort, it is possible to achieve a good credit score that can improve your financial options during your stay in the US.
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Frequently asked questions
International students can start building a credit score by opening a secured credit card, making timely payments, and keeping credit utilization preferably below 30%. Responsible financial habits, such as avoiding multiple credit applications, can help establish a solid credit profile.
International students can check their credit scores through services like Experian, Equifax, and TransUnion. Many banks and financial institutions also offer free credit score access, allowing students to track their credit-building progress.
A good credit score opens doors to financial opportunities, including better rental agreements, lower insurance premiums, and lower interest rates on loans. A strong score indicates responsible behavior and financial stability, which can be beneficial during the hiring process.
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