To international students, “American Dream” embodies the idea that anyone has an equal opportunity to achieve success and prosperity through hard work and initiative in this nation. However, as international students, we are overwhelmed by systematic disadvantages in real life. When applying for credit cards, it’s common for us to get denied just because our credit history is not good enough; when trying to apply for an installment plan online, we ended up opting out the checkout process because it requires a SSN; when purchasing a car at dealership, we often ended up paying full amount out of the pocket due to lack of a good credit score… We are all tired of these nuisances. So now what? How can we live a better life in the U.S.? In a nutshell, the answer is to start build a solid credit history today.
For those of you who’ve already had a checking or savings account for over half a year at a major local bank, such as Chase or BoA, and have deposited around $20,000, you would be more likely to get approved when applying for some ‘basic’ credit cards. Once you have a credit card in hand, you automatically start building you credit history through the credit report system at the bank. If you do have a SSN, the bank will then report your credit to the three major consumer credit reporting agencies (Experian, TransUnion, and Equifax). Strictly speaking, you can still have a credit record at these agencies even though you don’t have a SSN; it’s just that your bank will not report your credit history to the agencies. Whereas having a SSN and a credit card for over 6 months will get your FICO scores reported at the aforementioned credit reporting agencies.
Just an FYI, a FICO core is broken down as the following: payment history (35%), length of credit history (15%), amount owed to credit limit ratio (30%), new credit (10%), and credit mix (10%). After obtaining a FICO score and keeping up with monthly payments, you’ll be able to apply for an upgrade on your credit card. If you have been keeping up a good credit history for over 2 years, you’ll then get a chance to apply for auto loans, installment plans, and even mortgages.
What about those of you who don’t have a SSN? As mentioned previously, you credit history will be only accessible at the banks where you own your savings accounts. Without a SSN, even though you have a credit card, the truth is that you still won’t be able to build your credit history. Here’s some advice:
Start from scratch, go apply for an on-campus job, and get a SSN. Even if you quit the job after a while, having a SSN will still make your life in the states much more convenient.
Apply for a secured credit card, aka a prepaid credit card with a limited amount. Such card is tailored to the needs of those with zero or bad credit history. You should try to keep your credit card utilization rate (i.e. ratio of outstanding balance to credit limit) below 30% to avoid any negative impact on your credit score. Constant and smart management of the utilization rate will significantly enhance your credit limit over time and boost your credit score. By the time you get a SSN, your credit records accrued on this card will be reported to the credit bureaus accordingly.
Some credit unions in local college towns might have financing plans with discounts that are specifically catering to international college students. We also recommend you to do some research on those kinds of services.
Building a good credit score is no doubt tough and time-consuming. Many of international students only stay in the U.S. for two to four years, which means we don’t have access to most of the benefits provided by credit scores. Thanks to Boro, who is going to break through such credit dilemma that so many international students are currently facing. Boro Inc. (www.boro.com) is a financial technology company which leverages innovative big data underwriting model to provide affordable and convenient financing services to international students who don’t have credit history or SSN. Unlike traditional financial institutions, Boro goes beyond FICO score and takes student’s academic information, financial status, and employment history into consideration. With Boro’s service, international students can now apply for auto finance for any new or used car from dealerships within 28 states in the nation. Through making an affordable amount of payment per month, international students not only enjoy better cars, but also are able to better manage cash flow without imposing too much financial burden on their family. More importantly, now through partnering with Experian, one of the aforementioned credit reporting agencies, Boro paves the way for international students to build credit scores conveniently and substantially through making on-time monthly payments on the installments. The era of paying all cash upfront for a car is behind us.
International students have established a proven track record of academic and work performance, whereas have been constantly overlooked by the U.S. credit system. Our better access to those benefits provided by credit scores was long overdue. With more and more thoughtful services like Boro’s, which are created specifically to solve international students’ needs, we are gradually going to see an upturn in the stagnancy of international students being underserved in the credit system.