After graduating from college and getting his first job down in the Rio Grande Valley in Texas, Jorge V., an immigrant from Mexico to the U.S., needed a car to get to work (literally).
Jorge didn’t have a credit history in this country. And he needed credit to qualify for a car loan.
“In Mexico, there is a credit system, but it’s not something you talk with your friends or family about. If you want to buy something, you save enough money,” Jorge says. “When I moved here to Texas, I knew that at some point I needed to build credit, but while I was a student I didn’t think about it.”
Jorge got his first credit wake-up call when he tried to apply for a store credit card.
“The first time I got my Social Security number, I went to Best Buy and applied for a credit card. It was maybe a $100 to $1,000 line of credit, but I got rejected because I didn’t have any credit history.”
Once he needed a car to get to work, however, Jorge knew he couldn’t put off working on his credit any longer.
“For the first month, I didn’t have a car. But then my aunt became a cosigner on a car loan. If it wasn’t for her, I don’t know how I would have gotten a car loan,” he says.
While Jorge was fortunate to have an aunt in the U.S. who already had good credit and could cosign a loan with him, many new immigrants to this country aren’t so fortunate.
Along with everything else, they have to build their credit from scratch too.
While having a cosigner and a car loan helped Jorge kick-start his credit history in the States, credit isn’t just a one-and-done situation, and he still struggled with having what’s called a “thin credit file.”
Unlike the challenges faced by people who have negative marks on their credit report and have to rebuild their credit, thin files don’t always have negative items on their credit history.
They just don’t have enough items on their credit for lenders to understand how big of a risk it might be to lend them money.
Typically, lenders want their borrowers to have a long history of making payments on time, which makes having a thin credit file a challenge. In fact, thin-filers may have so little credit history they don’t even have a credit score yet.
Luckily, as an employee of Self Financial, Jorge knew just the right tool to help him solve his problem.
After paying off his car loan, Jorge continued building his credit by opening a Self Credit Builder Account.
Since the Credit Builder Account is an installment loan similar to a car loan, Jorge was able to keep this type of credit reporting on his credit report.
Not to mention he had the positive history of paying off a car loan too.
“Self’s been great!” Jorge says. “It’s been pretty easy to use the app to see my payments, to see if my credit score is going up or down, it’s very easy to use in my opinion.”
After years of working on his credit, first by using a cosigner, then continuing to build credit by himself with Self, Jorge and his wife are now in the process of buying their first home in the U.S.
Credit may not be the only path to creating wealth and opportunity in this country. But if you use it wisely, credit could help you achieve your own American Dream.
At least that’s how it worked for Jorge.
Lauren Bringle is an Accredited Financial Counselor® and Content Marketing Manager with Self Financial – a financial technology company with a mission to help people build credit and savings.