The Credit Score Trap as an Immigrant
You need a credit card to build a credit score, and you need a credit score to get a credit card
I finally have a credit score. And it’s not high at all. It’s even pretty low. So it may not seem like a reasonable reason to celebrate, but believe me, it is.
I became a lawful permanent resident in the United States (that’s the fancy way to say I got a green card) at the end of February. I was so happy to get the card in the mail. To me, it was the accomplishment of more than a year of paperwork, trying to get all the required forms on time, and figuring out what the next step of the process would be.
I thought after getting a green card, everything would be easy.
And for some of it, it was. I didn’t have to walk around the city with my oversized passport. It could now work. I didn’t have to stress about being legal in the country. I didn’t have to stress about explaining why I was legal in the country, even though my passport was only showing an expired visa.
However, that’s also when I discovered what a credit score is and how important it is to have one. And I said, have one, not even have a good one.
Applying for Credit Cards Without a Credit Score
I kept getting ads all the time about credit cards. Where I’m from, we don’t have those. The concept of credit cards seemed super attractive to me. You get to spend money you don’t have, and you get benefits and money back on your purchases? Sign me up!
I’ve always used debit cards, so I would say I had sustainable spending habits: if I didn’t have money on my account, the payment wouldn’t go through. As simple as that. So I’ve been used to spend less than what I make for years. Having a credit card seemed to be ideal for me as I wouldn’t get in debt while still getting all the benefits and cashback.
Having a credit card also seemed extremely useful as an immigrant. Before getting a green card, I couldn’t work in the United States. That meant that I needed to transfer money from my French bank account to my American one. International transfers are not only expensive, but they also get days to go through. Having a credit card could help me as it would be a way for me to keep spending money if I needed to, while I would be waiting for a transfer to go through.
So I decided to apply for a few credit cards. I got denied by every single one of them. Even the ones that got advertised to me in the mail. The reason was always the same: not enough credit history.
From there, it seemed quite obvious what the next step was: building some credit history.
After a quick Google search, I learned that the best way to do that was through credit cards. Ideal. I was trapped in the system. Because I just immigrated to the country, there wasn’t any data about how much money I make, I much money I spend, how much taxes I’m paying, nothing. So there could be no way a credit company would accept my credit card application. I was stuck.
No One Knows How to Get Started in the Credit System
I wasn’t this upset by the system yet. I wasn’t the only immigrant in New York City, I thought, so a lot of people must be in my situation, and I’m sure people in the city are used to dealing with that all the time. So I decided to go to the bank.
I asked the banker who helped me open a checking account (which, believe me, if you’re not a citizen is quite hard to do) how I could start building credit so I could apply for the best credit cards with the best cashback. I was surprised to discover that he didn’t have a clear plan for that.
“You could apply for a secured credit card, and within a couple of years, you would probably have enough credit history to apply for a student-level credit card.”
It seemed like a long-time process, and it also seemed like he wasn’t even sure about it. Of course, I wasn’t pleased with this process. Why would I need to go through a secured credit card? I’m making good money; I have great spending habits, I pay everything on time. But I guess it was the only way I could build credit, so I asked how to apply.
Here is the thing: applying for these secured credit cards isn’t even easy!
I needed letters from my landlord, my employer, and a family member. My landlord barely speaks English, I don’t have an employer because I work as a freelancer, and the only family member in the United States is my wife (which I’m pretty sure doesn’t count as a family member in this particular case).
I decided to give up on building credit for now. I decided just to use my debit card, make money, pay my taxes, and eventually, after a while, I thought it would appear that I am safe to have a credit card at some point.
The One Credit Card that Accepted my Application
I’m an Apple fanboy. I own most of their products, I upgrade them regularly, and they help me get so much done for my work.
Anyway, the temptation of owning the Apple Card was high. It seemed like a great credit card to start with as well as the emphasis seemed to be put on the clarity of information and user experience. So I decided to apply.
The application process was very straightforward and simple, and after just a few minutes, I got accepted. I had a tiny credit line for sure, but at least I got accepted, and I could already start using my credit card through Apple Pay.
I don’t know why the Apple Card accepted my application. Maybe they could see how good of a client of their company I was. Or perhaps they used to accept everybody since the Apple Card was a new product. Nonetheless, I had my first credit card.
Three months later, and after using it quite heavily in these times of pandemic, I now have a credit score and a very short credit history.
From now on, this score can pretty much only go up, and thanks to a few articles and a few books about personal finance, I now have a plan to make this score go as high as I possibly can.
Without a credit score, it gets impossible to live in the United States. You can’t buy a house, or a car, you can’t ask for a mortgage, you can’t apply for credit cards. Not even having a credit card can be problematic for some things as well. Something as simple as renting a car cannot be done without a credit card. This credit system is tough to get into, but it’s also very essential to have a decent life in this country.
I am very grateful I could get accepted for a credit card as it will build my credit score very quickly. But I’m also scared and surprised that there are no clear and more accessible paths for immigrants that need to get started. The banker I saw in New York City barely know what steps I could take to build credit, so I can’t imagine how uninformed bankers would be in a different region of the United States where immigration isn’t as common.
Immigrating in the United States is already a tough and lengthy process. But these little obstacles like the credit score, owning a credit card, or even opening a checking account, make it even harder to do simple things, such as… spending money. The lack of information for immigrants adds a ton of stress on something that’s already difficult: immigrating to a new country and feeling at home.
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