Getting a credit card as an international student in the United States can be a challenging task. However, there are a few options that can be explored to obtain one. Credit cards are not only necessary for making purchases, but they can also help international students build credit and assist them in their long-term financial goals, such as purchasing a car, taking out a mortgage, or applying for a loan.
International students face specific challenges when applying for credit cards. For instance, credit card companies have stricter rules for applicants under the age of 21, and they require proof of independent income or bank statements that show regular deposits. Additionally, most credit card applications require a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN). Despite these obstacles, there are ways for international students to obtain credit cards, such as applying for a secured credit card or credit builder loan until they raise their credit score.
Eligibility Requirements
International students face several challenges when it comes to getting a credit card in the United States. Here are some eligibility requirements that international students must meet to apply for a credit card:
Age Considerations
Credit card companies have stricter rules for applicants under the age of 21. Young students will need proof of independent income or bank statements that show regular deposits and an income to indicate they can make payments. Having a co-signer is another beneficial way to assure the credit card issuer that payments will be made on time. However, not all banks allow co-signers.
Social Security Number and ITIN
Most credit card applications require an SSN or ITIN. International students with an F-1 visa that provides work authorization in the U.S. can apply for an SSN and thus be able to qualify for most student credit cards. Students not authorized to work in the U.S. can apply for an ITIN, which is for any individual in the U.S. who has taxable income paid out in the U.S., including taxable scholarships. An SSN or ITIN is essentially how you create your financial profile, as it allows the U.S. to identify you.
Visa and Work Authorization
International students must have a valid visa and work authorization to be able to apply for a credit card. Students with an F-1 visa that provides work authorization in the U.S. can apply for an SSN and thus be able to qualify for most student credit cards. Students not authorized to work in the U.S. can apply for an ITIN, which is for any individual in the U.S. who has taxable income paid out in the U.S., including taxable scholarships. It is important to note that not all credit card companies accept ITINs as a substitute for an SSN.
Understanding Credit in the U.S.
Credit History Significance
Credit history is a significant factor in the U.S. financial system. It is a record of how well an individual has managed their credit accounts. Credit history plays a vital role in determining an individual’s credit score, which is a three-digit number that reflects their creditworthiness. A good credit score is essential for obtaining loans, credit cards, and other financial products with favorable terms and conditions.
Secured Credit Cards
International students who don’t have a credit history yet can apply for a secured credit card. A secured credit card requires a deposit, which serves as collateral for the credit limit. The deposit amount is typically equal to the credit limit. Secured credit cards are an excellent option for building credit because they report to the credit bureaus, just like regular credit cards.
Credit Builder Loans
Another option for building credit is a credit builder loan. A credit builder loan is a type of loan where the borrower makes monthly payments into a savings account. The lender holds the funds until the loan is paid off, and then releases the funds to the borrower. Credit builder loans are an excellent way to establish credit because they report to the credit bureaus, just like other loans.
Overall, international students can get a credit card in the U.S. by having a Social Security number (SSN), Individual Taxpayer Identification Number (ITIN), or being added as an authorized user. It’s important to note that credit history is significant in the U.S. financial system, and building credit is essential for obtaining loans, credit cards, and other financial products with favorable terms and conditions. Secured credit cards and credit builder loans are two options for international students to establish credit in the U.S.
Finding the Right Credit Card
When it comes to finding the right credit card as an international student in India, there are a few things to consider. Here are some options to explore:
Student-Specific Credit Cards
Some banks offer credit cards specifically for students, which can be a good option for international students. These cards often have lower credit limits and fewer rewards, but they may be easier to qualify for and can help build credit history. Some examples of student credit cards are Discover it Student Cash Back, Bank of America Travel Rewards for Students, and Citi Rewards+ Student Card.
Securing a Co-Signer
If an international student doesn’t meet the requirements for a credit card on their own, they may be able to secure a co-signer. A co-signer is someone who agrees to take responsibility for the debt if the primary borrower can’t make payments. This can be a parent, relative, or friend who has good credit and is willing to help. However, not all banks allow co-signers, so it’s important to check with the specific bank or credit card company.
Authorized User Option
Another option for international students is to become an authorized user on someone else’s credit card. An authorized user is someone who is given permission to use someone else’s credit card, but is not responsible for paying the bill. This can be a good way to build credit history, but it’s important to make sure the primary cardholder is responsible and makes payments on time.
Overall, finding the right credit card as an international student in India can be challenging, but with the right research and preparation, it’s possible to build credit history and establish financial stability in the U.S.
Building a Credit Profile
Applying for SSN or ITIN
To build a credit profile as an international student, one of the first steps is to apply for a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN). Students with an F-1 visa that provides work authorization in the U.S. can apply for an SSN, while those who are not authorized to work in the U.S. can apply for an ITIN.
An SSN is a unique nine-digit number issued by the Social Security Administration to U.S. citizens, permanent residents, and certain non-immigrant workers. It is used to track an individual’s earnings and work history for the purpose of determining Social Security benefits. An ITIN, on the other hand, is a nine-digit number issued by the Internal Revenue Service (IRS) to individuals who are not eligible for an SSN but have taxable income in the U.S.
Financial Profile Creation
Once an international student has obtained an SSN or ITIN, they can start building their credit profile. This can be done by opening a secured credit card or a credit builder loan. A secured credit card requires a security deposit that serves as collateral for the credit limit. This type of card is ideal for those with no credit history or a poor credit score. A credit builder loan is a type of loan that is designed to help individuals establish or improve their credit score. The loan amount is typically small, and the borrower makes regular payments over a set period of time.
It is important to note that building a credit profile takes time and requires responsible credit management. This includes making payments on time, keeping credit utilization low, and avoiding applying for too many credit cards or loans at once. By following these guidelines, international students can establish a solid credit history and increase their chances of being approved for credit cards and other types of loans in the future.
Overcoming Challenges
International students face unique challenges when applying for credit cards in the U.S. One of the biggest hurdles is meeting the requirement for proof of independent income or bank statements that show regular deposits. Here are some ways to overcome these challenges:
Proof of Independent Income
Credit card companies have stricter rules for applicants under the age of 21, requiring proof of independent income. International students who are not authorized to work in the U.S. may find it difficult to meet this requirement. However, there are some alternatives to consider:
- Apply for a secured credit card: A secured credit card requires a cash deposit upfront, which serves as collateral for the credit limit. This reduces the risk for the credit card company, making it easier for international students to get approved.
- Get a co-signer: A co-signer with good credit can help international students meet the income requirement. However, not all banks allow co-signers, so it’s important to check with the credit card company beforehand.
Bank Statement Requirements
Credit card companies may also require bank statements that show regular deposits and an income to indicate that payments can be made. International students may face challenges meeting this requirement if they don’t have a U.S. bank account or if their deposits are irregular. Here are some ways to overcome these challenges:
- Open a U.S. bank account: International students can open a U.S. bank account with their passport and visa documents. This can help them establish a financial profile in the U.S. and show regular deposits.
- Use a credit builder loan: A credit builder loan is a type of loan that helps people establish credit. It works by depositing a small amount of money into a savings account, which is then used as collateral for a loan. The loan is repaid in installments, which helps build credit history.
By exploring these options, international students can overcome the challenges of getting a credit card in the U.S. and start building their credit history.
