If you have moved to the United States from another country, you brought many things with you. You possibly brought your family, and likely brought your financial assets. You also brought your work-ethic, values, and professional skills.
One thing you likely left behind, however, is your credit score.
Because of legal, technical, contractual, and bureaucratic reasons, a person’s credit can rarely be transferred from one country to another. Even countries with deeply-connected economic systems, such as the United States and Canada, do not have system for seamlessly transferring credit information.
The majority of mortgages use a credit score for qualification, so if you’re planning on purchasing a home in the US, it is helpful to have a credit score, as it makes the process faster and more simple. But what if your excellent score, which you spend the last two decades creating, can’t make the journey with you?
Fortunately, there are many steps you can take to establish credit in the United States…
Establishing US Credit
There are mortgage programs available that will not require any tradeline history or credit scores for qualification. However, these programs generally require deep documentation and complex qualifications. It’s generally easier to have a credit score, and there is simply no way to create a score without some credit activity. The challenge of establishing credit in the United States, however, is that without a score, many lending institutions will not issue a line of credit. Essentially, you can’t get credit because you don’t have credit, and you don’t have credit because you can’t get credit!
The goal, then, becomes to establish a credit score and a tradeline history, which will make the best mortgage and interest rates available to you. To establish quality credit, you should have at least three tradelines, and one of these tradelines should be reporting for at least 24 months total.
Establishment Of U.S. Credit from Canada
Generally speaking, the development of U.S. credit from other countries can be difficult, but from what we have found, the Royal Bank of Canada is the only Canadian bank that will assist with the process of establishing U.S. credit. To complete their process, you would apply for your first RBC credit product, and they will use your Canadian Social Information Number to access your Canadian credit profile. Assuming everything checks out, they will then approve your application. Once your account is opened you can start building a credit history in the U.S., but you will need an American Social Security Number. You will generally need to wait about 45 to 60 days before any reports are submitted to the credit bureaus. To begin establishing credit, the RBC offers many products, including mortgages, HELOCs, and personal lines of credit. They also offer credit cards, which can be helpful for quickly establishing credit scores. Each account you open will act as an active tradeline. For the best scoring, it’s wise to keep balances to 30% or less of the limits.
If you had an American Express card in Canada, you can open a similar card in the United States. Global transfers from this company only require an active Canadian account for three months before using the program, making it a fast and convenient option. If you can, get an American Express card based out of Canada as soon as possible, as it will speed things up when you are ready to transfer your credit.
The TD U.S. Aeroplan card is another good options for establishing international credit. This card has specific cross-border applications that allow them to pull information from Transunion Canada to approve credit applications in the United States.
General Tips for Establishing Credit in U.S.
It’s often wise to establish as many tradelines as possible, as this will be extremely helpful when you need to establish U.S. credit scores. The longer your accounts are reporting the more options you will have when it comes time to secure an affordable U.S. mortgage.
As we’ve discussed, you will not be able to transfer your established credit to the United States, so you need to work on establishing good credit in the U.S. as soon as possible. The best way to start a credit history is to open a credit card. By keeping your balances low, making payments early, and managing your credit cards wisely, this can be an effective way to improve your score. Just be careful to not overspend or stretch your finances, or fees and interest rates can become a financial burden. However, if you are conservative with your credit cards, and can pay off your monthly balances, you will establish a quality score quickly.
If you are unable to establish U.S. credit cards because of no past history, you can apply for a secured credit card, which requires a deposit. A secured credit card lets you charge only the amount you have deposited, allowing you to establish credit with no financial risk to the lender. No matter what type of card you open, making payments on time is the most important aspect of building your credit score.
Generally, it will take about six months worth of credit activity to establish your credit history and be issued a credit score. When you use your credit responsibly you will have stronger and stronger scores. When your score goes higher over time, more borrowing options will come available, and you will generally see better terms, including lower interest rates.
However, it’s always important to manage credit wisely. Only open lines of credit that you need, and don’t allow your finances to become stretched simply to improve your score. (After all, money in the bank is still more important than a strong credit score!) With responsible management, you can create a strong credit score and get the affordable mortgage you need.
Let Us Increase Your Mortgage Changes
Whether you have good credit, bad credit, or no credit, the team at San Diego Purchase Loans will take a common-sense approach to your mortgage. While we can’t guarantee approval, we can promise to do everything possible to increase your chances of affordable terms.
With dedication, knowledge, and a commitment to service, we are the reliable team for mortgages in the San Diego area!
“This is the second time that I have worked with Chad (home purchase & refinance). He has become my subject matter expert and someone I depend on for all finance needs related to our home and real estate investments. My favorite things about Chad are his depth of knowledge, responsiveness, honesty and the great service he provides. I have referred countless friends and family of mine to work with him for no other reason than I know that he will treat them well and equip them for the best possible outcome. Chad will add tremendous value to any real estate transaction that you have and I am grateful to have him as a resource.”
Chad Baker and his team are amazing!
My husband and I found Chad through an article he had written. Every aspect of working with Chad and his team was exceptional. From our initial phone call where he explained the many options we had, to advice he gave in dealing with somewhat challenging sellers, and closing our loan ahead of schedule, the loan process with Chad and his team went very smoothly. I especially appreciated the one-on one guidance from Juliann, who really made me feel like I was her only client. I look forward to working with Chad and his team again and would highly recommend them to anyone looking for a mortgage.
A very responsible and experienced professional with his highly effective team
I really enjoyed working with Chad Baker and the rest of the team. This was our first time buying a home in California and we started with unnecessary assumptions based on our previous experience as home-owners in a different state. Chad and his team were available throughout the whole process, explaining the state differences, answering all our phone calls and emails quickly and directly, and providing detailed weekly status reports so that all parties including agents knew exactly where we were in the process. Chad was very experienced and provided customized loan products for us to consider, which definitely facilitated our transaction. I recommend the Chad Baker team! ”