Can Undocumented Immigrants Build Credit?

By Janet Berry-Johnson, CPA
Published on: 08/27/2019

Undocumented immigrants sometimes face a problem when it comes to getting established in the U.S. financial system: without a Social Security number, it can be difficult to get a credit card or take advantage of other financial services. And without a credit card, undocumented workers have a hard time building enough credit to buy a home or get an auto loan.

The good news is, with 10.5 million undocumented immigrants in the U.S., more financial institutions are allowing individuals without Social Security numbers to open checking accounts and apply for credit cards, auto loans and home mortgages – all of which help build credit. Read on to learn how undocumented immigrants can build credit in the U.S.

How to establish credit without a Social Security number

Generally, only U.S. citizens and noncitizens authorized to work in the U.S. by the Department of Homeland Security can receive a Social Security number (SSN). Many banks and credit card issuers ask for a SSN when you apply for a new card, as it helps them verify your identity. However, federal law does not require banks to check immigration status or obtain a SSN.

Step 1: Apply for an ITIN

If you’re not eligible for a SSN, you can apply for an Individual Taxpayer Identification Number (ITIN). This taxpayer identification number is used by the Internal Revenue Service (IRS) to account for tax returns and payments of resident and nonresident aliens with tax filing requirements in the U.S.

Step 2: Find a bank that accepts an ITIN for alternative identification

Many major banks and credit card companies allow applicants to use an ITIN or passport instead of a SSN when applying for a credit card. You might also try local banks or credit unions that provide services to under-served communities, including immigrants.

Without any credit history, you may have a difficult time getting approved for a traditional, unsecured credit card. However, you can start building credit with a secured credit card, by getting a cosigner, or by becoming an authorized user on a friend or family member’s credit card.

Step 3: Monitor your credit report

Once you start using credit, it’s important to monitor your credit report to ensure the information on your report is accurate and keep your credit in good shape.

Unfortunately, most credit monitoring services and automated credit reporting systems require you to enter a SSN to use the service. To access credit monitoring without a SSN, you will need to write to each of the three major credit bureaus (Experian, Equifax and TransUnion) to request a copy of your credit report.

You are entitled to one free credit report from each of the three major credit reporting agencies each year.

Immigrants do have credit options

Undocumented immigrants in the U.S. face a number of challenges, but building credit doesn’t have to be one of them. Avoid predatory lenders, such as payday loan companies and other high-interest, high-fee loans, and seek out legitimate banks and credit card companies that cater to under-served populations.

Ultimately, make sure that whatever credit product you choose reports to the credit bureaus so you can build the credit history you need for your life in the U.S. It might take more legwork, but having access to credit and a healthy credit score will provide more freedom and flexibility in the long run.

About the author

Janet Berry-Johnson is a Certified Public Accountant and personal finance writer. Her work has appeared in numerous publications, including CreditKarma and Forbes.

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Written on August 27, 2019
Self is a venture-backed startup that helps people build credit and savings.

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