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.
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. Good credit is calculated (by many lenders) by taking your FICO score which is calculated based upon what is in your credit report.  Building credit generally means building up your FICO score. Your FICO score is impacted my many factors, one small one of which is your utilization ratio of your installment loans like student loans.  This is the ratio of the current balance to your original balance.  To improve your score (slightly) you would want a lower ratio.  I would recommend paying your student loan down to 75% ratio as fast as you can and then you can go back to $50/month. A much better way to improve your FICO score is to have revolving credit.  Your student loans are not revolving, they are installment loans.  Therefore, you should open at least one credit card (assuming you currently have none) right away.  The longer you have had a credit card open, the better your FICO score gets.  Your revolving credit utilization ratio is way more important than your installment loan ratio.  Therefore, to maximize your FICO, try to never have more than 10% utilization on your revolving credit report to the credit bureaus each month.  Only the current month's ratio affects your score at any given moment.  You can ensure you don't go above 10% by paying your balance before the statement cuts each month to get it below 10% way before any payment would be due.  (You should always pay your remaining credit card statement balance in full each month by the due date after the statement cuts to avoid any interest charges.)  Note that there is a slight FICO advantage to having at least one major bank credit card instead of just only credit union credit cards.  Also, never let all your revolving credit report a zero balance in a month, you must always have at least $1 reporting to the credit bureaus on at least one of your open credit cards or your FICO score will take a big negative hit. If you cannot get a normal credit card, go to a credit union and find one that offers secured credit cards, or a bank that does.  A secured credit card is where you place a deposit with the bank that they hold and give you a credit limit to match your security.  Ideally it would be a card that graduates to unsecured after your demonstrate good history with them.  For example, the Navy Federal Credit Union secured card unsecures for many people.  I also believe the Wells Fargo Bank credit card (you can join if there is a family member who served or a roomate who did) also will unsecure.  The reason you want it to unsecure and not be forced to open a new account to get an unsecured account is that you want your average age and oldest age of open revolving credit accounts to be as high as possible as this is another impact on your FICO score. Credit unions that anyone can join include, Digital Federal Credit Union, the Pentagon Federal Credit Union (which offers a secured card that does not graduate), and The State Department Federal Credit Union (also offers secured card that I think does not graduate). One other method to boost your FICO score is to get added as an authorized user on one of your parent's credit cards that has been open a long time.  Not all lenders will report such an authorized user, however, ones that are known to do so are: Bank of America, Citi Bank, and Capital One.  It is a good sign that it will report if they ask for the social security number of the authorized user. However, note that the Authorized User addition can have no impact if the lender is using one of the newer versions of the FICO scoring model, only the older versions reward you for the age of accounts for which you are an authorized user. A very long term boost is to open your first American Express card underwritten directly by Amex such as their Zync card which is pretty easy to get.  The advantage of American express is that they remember the date your first credit card was opened with them and if you open new accounts in the future they will back date the date of their opening to match the date your first card was opened.  If you let your membership lapse, be sure to record the account number and date opened in your personal files so that you can help them locate it again if you reopen as they can have trouble if it has been on the order of ten years or more. Finally, note that the number of accounts opened in the last twelve months is a small negative mark on your score (along with number of inquiries), so if you open a lot of accounts all at once, in addition to bringing down your average age of accounts, you will also get dinged for how many were opened in the last year. "The other option apart from the above which I feel is quite good is ""Travel Card"" [also called Forex Card] issued in USD. These cards are like prepaid debit cards. They are available from almost quite a few Indian Banks like HDFC / ICICI / UTI. The limit for students is around 100 K USD per year.  http://www.hdfcbank.com/personal/cards/prepaid_cards/forexplus_card/pre_forex_elg.htm The card can be reloaded by any amount [i think the minimum is USD 100] by visiting the Branch or certain Forex agents. There loading fee is INR 75. The Fx is typical Card Rate prevailing on the day. In US this card can be used as a credit card for almost everything [I have used this without any hassel]. Avoid using the card for blocking anything [at Hotel for room booking, or initial block at car rentals]. Although its mentioned that there is a withdrawl fees, i was never charged anything for withdrawls. The card comes with an internet based login to monitor account balance and transactions. Any unused funds can be withdrawn in India. The payment will be make in INR." The negative effects of multiple hard inquiries in a short span of time don't stack, they're treated as a single inquiry (and inquiries aren't *that* bad anyway, the only ding you by a few points).  The bigger problem here is the **other** reason your bank gave you - Too many overdrawn accounts.  If you don't believe you currently have any overdrawn accounts, you need to pull your credit report *now* and make sure it's accurate.  Maybe there's a mistake on your credit, maybe you're a victim of identity theft.  That said, 1.5 years isn't really very long in credit terms for managing to keep your record clean, so maybe your credit just needs a few more years to heal.  But *definitely* pull your credit report to rule out the worst possibilities. You could conceivably open a few accounts.  For example, a bank account and a credit card account.  Then the accounts will be older when evaluated for credit when you return.  This would look better than opening fresh accounts later.  But don't expect a big difference in score.  And you'll be stuck with those accounts in the future, otherwise you lose the benefit.  I wouldn't worry about maintaining balances now.  You can wait until you come back.  Occasional purchases may be helpful.   What they really want to see is a regular and sustained use of accounts without missing payments or overextending.  But if you're not going to be here, you can't really do that.  Note that good credit scores are based on seven years of data, preferably a lot of it.  Opening a few accounts can't substitute for that, even if you put balances on them.   If you're not here, you won't be paying rent or utilities.  You won't have a proven payment history on the most common accounts.   If money were no object, you could do something like purchase a house or condo that you could rent out, utilities included.  That would build up a payment history.  But if money were no object, you probably wouldn't be worried about your credit score.  It's more practical to just live normally and be sure that you always live within your means so that you don't experience negative credit events.   You might think about why you want a good credit score.  Is it to borrow a lot of money?  You might be able to spend money to achieve that.  Is it to save money on future borrowing?  If it costs money now, how much will you save total?   Opening accounts now that you won't really use until you return is about the only thing that you can do that won't cost you money.  Perhaps put a balance on the bank account--at least you'll get that money back some day.  Maintaining a balance on the credit cards would cost you money in interest charges, and you don't really benefit from an improved credit score until you use your credit.  So the interest fees aren't really buying you anything. How is it more difficult? All you have to do if you are legit staying for at least 2 years is just get a cosigner. Also if they really did care, they would find all of us that did it, and collect the debt, and therefore it wouldn't be such a deterrence to give E2 guys visas. They would actually profit off it with the interests, lates fees, ect. They would WANT you to leave without paying. So if they dont care, whats the big deal? "I will disagree with the other answers. The idea that there is some to establish a ""credit history"" is largely a myth propagated by loaners who see it as positive propaganda to increase the numbers of their prospective customers. You will find some people who claim they were rejected for a card because they had no ""credit history,"" but in every case what these people are not telling you is they also had no income (were students, house wives, or others with no steady income). Anyone who has income can get a credit card or other line of credit regardless of their ""credit history."" Even people who have gone bankrupt can get credit cards if they have proven income. If your answer to this is that ""you have no income, but still want a credit card"", I would advise you to re-read that sentence several times and think carefully about it. I have never had a credit card and never missed having one, except when trying to rent cars which was somewhat complex and annoying to do in the 2005-2010 time period without a credit card. Credit cards have a number of disadvantages: I definitely agree with those who will tell you credit cards are convenient, they are, but for someone who wants to be financially prudent and build wealth they are unnecessary and unwise. If you don't believe me, read ""The Total Money Makeover"" by David Ramsey, one of the most famous and best-selling books ever written on personal finance. He actually will give you much better and detailed reasons to avoid CCs than me. After all, who am I, just some dumb rich schmuck with lots of money and no debt and a happy life. Comment on Culture I think it is pretty funny we have a lot of spendthrift Americans in this thread basically telling the OP to get lots of credit cards as soon as possible. If you asked the same question in Japan you would get completely different answers and votes. In Japan its hard to even use credit cards. The  people there are much more responsible financially than Americans; the average Japanese person has much higher wealth than a person with the same income in the United States. One of the reasons for this, among many, is that the average Japanese person does not use credit cards. A Japanese person, if you translated this question for them, would think the whole thing a typical example of how foolish Americans are." I got a credit card as a student with no income, not even a part time job. They called me, I agreed to one thing and they did another and now I have an old credit history. They don't do this anymore. But technically, student loan debt is unsecured? Generally, banks will report your loan to at least one (if not all three) credit bureaus - although that is not required by law. The interest you're paying, in addition to your insurance isn't justifiable for building credit. I would recommend paying the car off and then perhaps applying for a secure credit card if you are worried about being rejected. Of course, since you have very little credit, applying for an unsecured card and getting rejected won't hurt you in the long run. If you are rejected, you can always go for a secured credit card the second time.  As I mentioned in my comments, it's better to show 6 months of on-time payments than to have no payment history at all. So if your goal is to secure an apartment near campus, I'm sure you're already a step ahead of the other students. The SCHUFA explicitly says on their website that their scoring system is a secret. However, if your goal is to be credit-worthy for example to get financing for a house or a car or whatever, just pay any loans and your credit card back on time and you'll be fine. There is no need to build a credit history. I just got a mortgage on a new house without any real credit history. I have one credit card which I only use on vacations because some countries don't take my debit card, and I always put money on it before I use it, so I've technically never borrowed money from a bank at all. My banker looked at my SCHUFA with me and we saw that there was nothing in there except for the credit card, which has a 500€ limit and if I maxed it out, the monthly interest would be 6,80€ so he added that 6,80€ to my expenses calculation and that was it. If you're having trouble getting a loan and you don't know why, you can ask the SCHUFA for the data they have on you and you can correct any mistakes they might have made. Sometimes, especially when you have the same full name and birth date as somebody else, the SCHUFA does get things mixed up and you have to sort it out. "1. Your oldest active credit agreement is not very old This is fairly straight forward. If you've not been exposed to borrowing for a reasonable length of time, people won't want to lend you money. They have no reason to have any confidence in your ability to repay them. As other said, it's pretty much a case of proving yourself by being good with credit over a period of time. 2. You have no active credit card accounts Credit reference agencies have to consider a variety of factors for a variety of purposes. Notably, they will be used for credit cards, unsecured loans, mortgages, and secured loans such as vehicle finance applications. These all have varying types of customer, and some will be inherently more risky than others. For instance, someone with a mortgage on a home is far more likely to make payments because they would be homeless without, however someone with a finance agreement on a car is relatively less likely to make those payments because all they stand to lose is their car. Consider that the most fruitful information the lender will get is a score and some breakdown of how it's generated, it's a very general understanding of your history. For that reason, having a wide variety of credit is very important. A good variety of credit to have would be one secured loan (e.g car finance) to get started, as well as at least one revolving unsecured credit account (e.g a credit card), and later on in your ""credit life"" an unsecured fixed term loan (e.g a loan for something which has nothing secured against it). I say the above reluctantly, because that's how I increased my credit score from 450 to 999 - first step was the car finance where in 3 months or so I changed from 450 to around 600, with a credit card I was approaching 900, and once I had an unsecured loan for 8 months I hit 999 - now I have all of the above plus a competitive mortgage and remain at 999. Whether each is mandatory to maintain 999 is debatable but based on personal experience, it seems reasonable." "As a person who has had several part time assistants in the past I will offer you a simple piece of advise that should apply regardless of what country the assistant is located. If you have an assistant, personal or business, virtual or otherwise, and you don't trust that person with this type of information, get a different assistant.  An assistant is someone who is supposed to make your life easier by off loading work. Modifying your records before sending them every month sounds like you are creating more work for yourself not less. Either take the leap of faith to trust your assistant or go somewhere else.  An assistant that you feel you have to edit crucial information from is less than useful. That being said, there is no fundamental reason to believe that an operation in the Philippines or anywhere else is any more or less trustworthy than an operation in your native country. However, what is at issue is the legal framework around your relationship and in particular your recourse if something goes wrong.  If you and your virtual assistant are both located in the US you would have an easier time collecting damages should something go wrong.  I suggest you evaluate your level of comfort for risk vs. cost.  If you feel that the risk is too high to use an overseas service versus the savings, then find someone in the states to do this work.  Depending on your needs and comfort you might want to seek out a CPA or other licensed/bonded professional.  Yes the cost might be higher however you might find that it is worth it for your own piece of mind. As a side note you might even consider finding a local part-time assistant. This can often be more useful than a virtual assistant and may not cost as much as you think. If you can live without someone being bonded.  (or are willing to pay for the bonding fee) yourself,  depending on your market and needs you may be able to find an existing highly qualified EA or other person that wants some after hours work.   If you are in a college town, finance, accounting or legal majors make great assistants.  They will usually work a couple hours a week for ""beer money"", they have flexible schedules and are glad to have something pertinent to their degree to put on their resume when they graduate.  Just be prepared to replace them every few years as they move on to real jobs." Obviously the only way to have good credit is by owing money, and making payments as scheduled. To do this I would do everything I could to place all of your required expenses on a credit card. This can include paying rent, food, transportation, etc.  These are all payments that you already make, but simply move then through a different payment vehicle. It sounds like at this time you may not have a credit card that allows you to do this, but I would watch out for those cards that come in via mail with all kinds of special deals. While you have not mentioned if you have any of this, make sure that you keep up with your past debt and negotiate repayment if needed. Once your credit improves, you should begin to see doors opening that are problems now. 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. Well, I know why the Rabobank in the Netherlands does it. I can go back around one year and a half with my internet banking. But I can only go further back (upto 7 years) after contacting the bank and paying €5,- per transcript (one transcript holds around a month of activities).  I needed a year worth of transcripts for my taxes and had to cough up more than €50. EDIT It seems they recently changed their policy in a way that you can request as many transcripts as you like for a maximum cost of €25,- so the trend to easier access is visible.