Ways to establish credit history for international student
I would like to establish credit history - have heard it's useful to   gain employment and makes it easy to rent an apartment? Higher credit scores will make it easier with landlords, that's true. As to employment - they do background checks, which means that they usually won't like bad things, but won't care about the good things or no things (they'll know you're a foreigner anyway). Is it safe to assume that this implies I have no history whatsoever? Probably, but you can verify pulling through AnnualCreditReport, don't go around giving your personal information everywhere. Is taking out a secured loan the only way for me? No, but it's one of the easiest. Better would be getting a secured Credit Card, not loan. For loan you'll have to pay interest, for a credit card (assuming you pay off all your purchases immediately) you will only pay the credit card fees (for secured credit cards they charge ~$20-100 yearly fees, so do shop around, the prices vary a lot!). If you're using it wisely, after a year it will be converted to a regular credit card and the collateral will be returned to you with interest (which is actually very competitive, last I heard it was around 2%, twice as much as the online savings accounts). As to a secured loan - you'll be paying 4% to CU for your own money. Doesn't make any sense at all for me. For credit cards you'll at least get some value for your money - convenience, additional fraud protection, etc. The end result will be the same. Usually the credit starts to build up after ~6-12 months (that's why after a year your secured CC will be converted to a regular one). Make sure to have the statement balance in the range of 10-30% of your credit limit, to get the best results. Would it make much better sense to wait till I get a job (then I would   have a fixed monthly salary and can apply for a regular CC directly) You can apply, but you'll probably be rejected. As I mentioned in another answer elsewhere, the system in the US is such that you're unable to get credit if you don't already have credit. Which is kindof a magic circle, which you can break with the secured credit card as the least costly solution. I would like to post a followup after almost a quarter. littleadv's advice was very good, and in retrospect exactly what I should have done to begin with. Qualifying for a secured credit card is no issue for people with blank credit history, or perhaps for anyone without any negative entries in their credit history. Perhaps, cash secured loans are only useful for those who really have so bad a credit history that they do not qualify for any other secured credit, but I am not sure. Right now, I have four cash secured credit cards and planning to maintain a 20% utilization ratio across all of them. Perhaps I should update this answer in 1.5 years! I think you should try to talk with the credit union at your campus first, they may have offer you a credit card even you don't have any credit history. I came to US as an international student several years ago, and I have also experienced the same situation like most of the international students in finding ways to build credit history. Below I list out some possible approaches you may want to consider: I. Get a student job at campus (recommended) I think the best way is to get a student job in university, say a teaching assistant or student helper. In this case, you can be provided with a social security number and start to build your own credit history. II. Get credit card You can also consider to apply for a credit card. There are indeed some financial institutions that can provide credit cards for international students with no or limited credit scores requirement, say Discover and Bank of America. However, it is relatively hard to get approved, simply because hey may put more restriction in other aspects. For example, you may be required to keep sufficient bank balance above several thousand dollars during a period of time, or you should prove that you have relatives with citizenship in US who can provide your financial aid if needed. III. Apply for a loan (recommended) Getting a loan product is another alternative to get out of this difficult situation, but most of people don’t realize that. There are some FinTech start-ups in United States that specifically focus on international students’ loan financing. One representative example is Westbon (Westbon ), an online lending company that specializes in providing car loan for international students with no SSN or credit history. I once used their loan product to finance a Honda Accord, and Westbon reported my loan transaction records to US credit bureau during my repayment process. Later when I officially got my SSN number, I found my credit history has been automatically synchronized and I don’t have to start from all over again. It never be an easy journey for international students to build credit history in United States. What approach you should make really depends on you own situation. I hope the information above can be useful and good luck for your credit journey! There's an excellent new service called SelfScore that offers US credit cards to international students. They work with students without a credit history and even without an SSN by using other qualifying factors such as major, financial resources in their home country, and employability upon graduation. Worth clarifying: it's neither a secured credit card nor a prepaid card. It's a proper US credit card with no annual fees and a relatively low APR designed to help students build US credit. The spending limit is relatively small but that probably doesn't matter for just building a credit history.
"The big reason why this is hard to wrap your head around via analogy is because we think of ""money"" as printed paper cash. Now, that stuff *is* money, but it's not the only kind of money. In fact, it's not even close to the majority of money in the system.   When you charge dinner to a credit-card, your credit-card company sends an electronic ""promise"" to the restaurant, which based on your ""promise"" to re-pay the credit-card company, which is in turn based on your employer's promise to pay you for wages that you earned this past week, and so on... Similarly, the restaurant pays their landlord and employees and suppliers with checks and electronic-funds funds transfers, which are promises that the restaurant's bank will pay the check-holder's bank and so on.   It's not like there are gnomes running around with bags of cash or gold behind the scenes: these ""promises"" are money that is actually being spent and re-spent, usually *without ever getting reconciled as actual cash withdrawals of printed currency.* It's promises all the way down: You can pay off a mortgage without ever once handing anyone a single printed dollar-- it's just checks and bank-transfers from your employers/investments, passed along to the creditor. And that's *real money*, even if it never gets printed.   This can be pretty cleanly described mathematically (that's the kind of stuff where econ is pretty genuinely a ""science"", as opposed to the messier market-prediction and public-policy stuff). But it is very hard to make sense of via ""analogy"".   That's why I used a fictional world where money doesn't exist. If you set aside your preconceptions, don't try to second-guess or think ahead to the conclusions, but just read through the story as it is written, you will see that there is *no meaningful difference at all* between the apple-certificates, the merchant-cartel-printed loddars, and a personal IOU handwritten from one person to another, except for the credibility of the issuer.   Seriously, don't argue, don't ""yeah, but"", don't try to tie this to your paycheck, don't try to think about how this relates to the mortgage collapse, just read through the story as it is written. Because I can't ""prove"" to you (except through pretty hairy mathematical models) that money is debt by explaining it in reverse-- it runs counter to all of your experiences as a participant in the model, in countless ways. *But it is*.   Until you internalize that fact, and wrap your head around the fact that money is just IOUs, it will never make sense that money can be just ""gone"". If you sell me a watermelon, and I get hit by a bus carrying it home, the watermelon is gone. ""Yeah, but I still have the money"", you say.   But suppose that instead of cash, I had written a promise to come paint your house this weekend. ""Sure,"" you say, ""but that's not the same as money."" *But it is*, in very literal ways.   I'm never going to convince you that my promise to paint your house is the same fundamental stuff as US Dollars, differentiated only by the credibility of the issuer... you're just not going to believe me, and we'll get nowhere arguing analogies.   So instead, just read through the story above, without prejudice, and follow the history of that little make-pretend world. Because you'll never make sense of ""where the money went"" until you can internalize the concept of money as promises that can be broken." "My husband made a similar car loan decision when he was younger and didn't have an established credit history / favourable credit rating.  As a result, he ended up paying triple what the car was worth, because of the interest. When we consolidated our finances, this ugly loan was first on our list of priorities to change, convert, eliminate, but unfortunately, in our case, the terms of the loan were such that only the lender benefited.  There was no incentive to pay off the loan early, in fact, we would have to have paid all the future interest at once, without saving a penny. So check the terms of your loan - hopefully you're better off than we were.  In our case, the only upside we could figure was the lesson of ""live and learn""!" Sorry to hear about your difficult circumstances. Secured Credit Card You may want to suggest a secured credit card. These are credit cards that are backed by a deposit that she would place with the credit issuer. The card issuer provides a line of credit backed by the deposit, with a credit limit not greater than the deposit. In this way, the card issuer is not putting any of their own money at risk. These cards are often used by students or high-risk borrowers to establish credit, and function like a normal credit card. This may be a good option for her to establish a history of handling credit responsibly. Given all of the activity you described, it's very likely the process of rehabilitating her credit will take a number of years. I would strongly recommend that you not assist her in placing the deposit for a secured credit card. If she can't put aside enough money for a deposit (often $500 or less), it's unlikely she'll be able to set aside the money to pay her card statements each month. Best of luck - I hope things work out well. Does your employer offer direct deposit?  Can you deposit to more than one account? Personally, I have my pay split up like this via direct deposit: From an early age I found that separating my expenses from my spending money kept me inside my spending limits and kept my savings on track.  In fact, checking account 1 and 2 are at two different banks. Get yourself a credit card to start establishing some credit.  Make a payment plan for the student loan, but before focusing completely on repaying it start to establish an emergency fund. Something I'd like to plant firmly into your mind - If you're able to save up enough money to buy the things you want outright, credit will be of little use to you. Many people find once they've accumulated very good credit scores by use of good financial habits, that they rarely end up using credit, and get little out of having a 'great' credit score compared to an 'average' credit score. Of course, a lot of that would depend on your financial situation, but it's something to keep in mind. As stated by others, and documented widely online, you don't need to make payments on a loan or carry a card balance to build your credit history. Check your credit on a popular site, such as Credit Karma (No affiliation). There, you'll see a detailed breakdown of the different areas of your credit profile that matter; things like:  The best thing I could recommend is get a credit line or credit card, and use it responsibly. Carrying a balance will waste money on interest, much like the car payment. Just having it and not over-using it (Or not using it at all) will 'build' your credit history. Of course, some institutions may close your account after X number of years of inactivity. With this in mind, I'd say it's safe to pay off the car loan. Read your agreement and make sure there aren't early termination / early payment fees for this. Edit: There have been notes in the comments section's of question/answer's here about concerns with getting apartment. My two cents here: Most apartments I've seen check your credit for negative marks.  Having no credit history, and thus never missing a payment or having a judgement made against you, will likely be enough to get you into most normal-quality apartments, assuming the rest of your application / profile is in order, like:  - Good references, if asked for them  - At least 2.5x rent payment in gross income etc, things like that. If they really think you're a risk, they may ask for a larger deposit (Though I'm sure in some areas there may be restrictions on whether they can do this, or how much they can do it) and still let you rent there. "Agree with wrschneider99. Also, since it's a ""credit report"" it helps to have a history of credit. My wife has been in the U.S. for 14 years and now has a higher credit score than me, a U.S. citizen. When we leased a car we put it in her name. When we took out a mortgage it's under both our names." If I use my credit card on my ITIN and behave like a good guy (paying   everything on time), will it create history for my SSN next year or   will I have to start from scratch? Yes, you'll keep your history, it will be reported on your SSN when you update your creditors with it. I have an option of using a secured card v/s an unsecured one. Which   one is better from the view of my credit history? The one which you don't have to pay for. Consider the value of money you're using for the secured card, and all the fees and interest you expect to pay. Unless you're planning on a mortgage in the next couple of years, there's no rush with the credit. It is definitely not worth paying money for. First step is to see if you have any family members which can co-sign for you so you can get a credit card, then from there as you pay off the credit cards payments you can slowly build credit. However, since you don't have any previous credit history it'll be a slow process. I think that would be a good first step in the right direction. Alternatively, you can see if close relatives such as your parents can help pay for a financial advisor who can help you much better with issues like these