“Oh, zero credit score. We got a Casper the Friendly Ghost right here.”
That was said of us by someone checking on our credit score. We were new immigrants and we were about to make a big purchase – our very first car.
CREDIT SCORE is one of the many things that blindsides new immigrants who come to the United States of America. It sure did surprise us!
Apparently, it is very much intertwined with the American economy and has a direct effect to an individual’s personal and collective buying power.
Why did no one warned us about this?
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THE POST BELOW IS ABOUT HOW A ZERO CREDIT SCORE IMPACTS NEW IMMIGRANTS TO THE USA.
What Is A "Credit Score"?
What is a credit score and why there is a need for it?
Credit rating refers to an assessment of a borrower’s creditworthiness. It can be applied to an individual or a corporation or even a government.
A credit score is the 3-digit expression of that rating. Credit score is equivalent to a person’s creditworthiness based on credit history and attitude toward debt.
It typically ranges from a low of 301 to a high of 900. The higher the score, the better it is for you, the borrower.
The whole reason why a company or institution wants to know someone’s credit score is to answer the following questions:
- SHALL WE EXTEND FINANCIAL GOODWILL TO THIS PERSON?
- SHALL WE ALLOW THIS PERSON TO AVAIL OF OUR PRODUCT OR SERVICE ON CREDIT?
- ARE WE RISKING OUR MONEY ON THIS PERSON?
In layman’s terms, it is like asking a friend or a neighbor, “HEY DO YOU KNOW THIS PERSON?”
- Do you know if this person HAS THE ABILITY or CAPACITY to pay or not?
- Does this person HAVE THE TENDENCY to pay or not?
- Does this person have a known practice to pay EARLY or DELAY in paying debts?
But instead of asking a neighbor or a friend, there are three major credit bureaus that calculate the credit score.
Truth be told, I did not know what a credit score is prior to coming over. I was blaming myself: Did I ask enough about it? Did I research enough?
Zero Credit Score May Deny You Of Goods And Services
Here you are, a fresh off the boat, and you need a lot of things:
- food
- shelter
- clothing
- utilities
- phone and internet
- school
- medicine
- many more
As a new immigrant, you do not have a score yet. Nada. Zero. Zilch.
The businesses and the companies that you want to do business with may worry that they DO NOT HAVE ANY BASIS of your capacity and willingness to pay.
To protect themselves and mitigate the risk of them losing money over you, it is easier to deny you goods and services that they offer.
We tried to rent an apartment when we were new immigrants, but we got denied because we do not have a credit score yet. (Read PART 2 below. 
)
Zero Credit Score Hits You With Higher Prices And Interest Rates
Again, as a new immigrant and your credit score is still non-existent. The businesses and the companies that you want to do business with would may worry that they may lose money over you.
Many companies will take the risk of losing money in return for a higher price and high interest rates.
Some banks will issue you credit cards with a high APR (Annual Percentage Rate) – the yearly interest that borrowers pay. Some businesses will allow you to pay in installments in exchange for a higher price of goods.
When we first tried to get a car, on our 5th month here in the US, the salesperson at the dealership said “OH, YOU ARE ONE OF THE CASPERS.” AKA Casper The Friendly Ghost.
He meant we were like ghosts because like them we have no credit scores, too. Yet.
We got a car but, of course, the interest was high.
Zero Credit Score May Require Additional Documents and Guarantors
Some companies are willing to deal with newcomers like you who have no credit scores yet. They reduce their risk of losing money over you by asking for ADDITIONAL guarantors.
These guarantors must have verifiable credits scores of their own. And if there is a contract to sign, these guarantors will sign the contract, too. They will be the people who promise to pay if you cannot pay the company you are dealing with.
(Part 2 of our apartment rental story.)
Because we were new in the country and we were about to rent from a big apartment rental company, the rental process was quite tedious, and the lease agreement was rigid and unbending. (Compared to, say, a homeowner leasing their extra rooms or extra house.)
Having zero credit score and inexistent credit history, the company required us to have guarantors. Not just one but two guarantors.
So, we asked our support system for help. We had one nephew and sister-in-law to back us up on the contract with their signatures and their credit scores.
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Zero Credit Score May Require You To Pay Upfront
As new immigrants with no verifiable credits scores yet, there are lesser companies that take risk money on you.
To balance out the risks, these entities will hit you with high interest rates and additional co-signors on the contracts.
In addition, they may also ask for higher upfront fees. Sometimes, they even require twice as much advance payment as they normally require of someone with good credit scores.
(Part 3 of our apartment rental story.)
We were required to pay, UPFRONT FEES, one month deposit and two months advance payment.
Later, we learned that in some cases (possible for those with verifiable good credit scores) the fee was just one month deposit.
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Few New Immigrants Know About Credit Scores
If credit score is so important and new immigrants like us will also be subject to it, WHY DID WE NOT RECEIVE A MEMO ABOUT IT?
No one has told us about this subject of creditworthiness and how it would affect our financial future in the US. Not even from our friends and family who had been here for decades.
Why?
It is possible that new immigrants like us did not ask about CREDIT SCORE specifically. Maybe if we did then our family and friends could have answered us specifically also. Or maybe they do not even know WHAT A CREDIT SCORE IS.
Did we ask enough? Did we research enough? But then again how can we ask or research things we do not even know about?
In fact, most immigrants would have their FIRST LESSONS in credit score and its effects when they go through situations. We know because we were blindsided by it, too.
Most of the immigrants we have encountered did not know what credit score was when they came over.
Many immigrants, despite years of being in the US, do not know how their credit scores affected their purchase of their house, their car, and the interest rates on their credit cards.
New Immigrants Must Know About Credit Scores
Dear new and incoming immigrants, our aim in bringing this information to you is to educate you. We hope that you will not only build a credit history FAST, but maintain a HIGH SCORE, too.
We would have liked to know what a CREDIT SCORE is before we came over ourselves. We wished there was someone who could have told us about it.
Therefore, in compliance with our mission and vision here at UIM (Unauthorized Immigrant Momsense) we are now compelled to share it, especially knowing now how important it is in everyday life here in the US.
Having a GOOD CREDIT SCORE means putting more money in your pocket and sprinkling good financial opportunities along your way.
Do your best to learn about credit scores and how it will impact you and your family’s financial future.
We provide you with several links to additional information about CREDIT SCORE below this post.
From Zero to Hero
As new immigrants, you all came to the United States with the aim to provide for you and your families a BETTER FINANCIAL FUTURE.
On the subject of credit score, you are a blank slate – you are yet to build your credit scores.
It should be clear by now that you must build towards a GOOD SCORE because it has a direct impact on your finances and buying power.
Having a good credit score is a perfect component to achieve our financial future. Hence, it pays to be properly and adequately informed on this important subject and aim to build it correctly.
A non-existent credit history or lack of credit score also means that you have to lean on your support groups: Your family, friends and community. Be a good and dependable member of your social circle.
To sum up, for your own good and future success:
First, learn and educate yourself about credit history and the factors that influence your rating. If you are an incoming immigrant, all the better – learn as much as you can before coming over.
Second, do not be armed with theories only but you must use the knowledge in real life applications. You must tailor your lifestyle in a way that you will build credit fast, get a high score and maintain it.
Third, expect a good financial future because of the good financial management you practice in your life. Expectation means hope and that hope can get you through the harsh journey of being an immigrant.
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There you have it, dear immigrants, how in a nutshell, the impacts of zero credit score on new immigrants like you. Learn more about it and strive to build (and maintain) a high credit score.
Share this article to a fellow immigrant.
Thank you!
Maria is just a chatterbox (on a mission.😋)
NO ONE AUTHORIZED her to spew all this MOMSENSE, but she is a complicated cat and so she feels that she must. Be advised and take a spoonful of salt for every opinionated post you read here. And please, please consult a professional for individualized advice on life-altering decisions.
Maria is just a chatterbox (on a mission.😋) NO ONE AUTHORIZED her to spew all this MOMSENSE, but she is a complicated cat and so she feels that she must. Be advised and take a spoonful of salt for every opinionated post you read here. And please, please consult a professional for individualized advice on life-altering decisions.
THE POST ABOVE IS ABOUT HOW A ZERO CREDIT SCORE IMPACTS NEW IMMIGRANTS TO THE USA.
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SUGGESTED TOPICS
- What is Credit Score in the United States?
- What is a Good Credit Score and What Impacts it?
- How to Build Your Credit History Fast?
- What is a Credit Bureau? And what are the 3 Major Credit Bureaus?
- How to Understand Your Credit Reports?
- What is Debt-to-Income Ratio vs. Debt-to-Credit Ratio?
- How Often Does Your Credit Score Update?
- How to Raise Your Credit Scores Fast?
- How to “Fix” a Bad Credit Score?
- How to Rebuild Your Credit After Divorce?
- Can Buying a House Affect my Credit Score?
- Does Losing Your Job Affect Your Credit Scores?
- Can Medical Collection Debt Impact Credit Scores?
REFERENCES
HTTPS://EN.WIKIPEDIA.ORG/WIKI/CREDIT_SCORE_IN_THE_UNITED_STATES
HTTPS://WWW.INVESTOPEDIA.COM/TERMS/C/CREDITRATING.ASP#:~
HTTPS://WWW.NERDWALLET.COM/ARTICLE/FINANCE/CREDIT-UTILIZATION-RATIO-DEBT-TO-INCOME-DIFFERENCE
HTTPS://WWW.CNBC.COM/SELECT/HOW-OFTEN-DOES-YOUR-CREDIT-SCORE-UPDATE/
HTTPS://WWW.CNBC.COM/SELECT/HOW-TO-BOOST-YOUR-CREDIT-SCORE-FAST/
HTTPS://WWW.LEXINGTONLAW.COM/EDUCATION/HOW-TO-FIX-CREDIT
HTTPS://WWW.BANKRATE.COM/PERSONAL-FINANCE/CREDIT/HOW-TO-BUILD-CREDIT/
HTTPS://WWW.EQUIFAX.COM/PERSONAL/EDUCATION/CREDIT-SCORE/HOW-TO-REBUILD-CREDIT-AFTER-DIVORCE/
HTTPS://WWW.LENDINGTREE.COM/HOME/MORTGAGE/CREDIT-SCORE-STUDY/
HTTPS://WWW.CHASE.COM/PERSONAL/CREDIT-CARDS/EDUCATION/CREDIT-SCORE/DOES-UNEMPLOYMENT-AFFECT-SCORE
HTTPS://WWW.CAPITALONE.COM/LEARN-GROW/MONEY-MANAGEMENT/HOW-MEDICAL-BILLS-AFFECT-CREDIT/
