Obstacles Immigrants Face Establishing Credit In America By FederatedCreditCards.Com Copyright © 2008 - 2011

Credit reports do not transfer from one country to another so a person who immigrates to the United States begins financial life here with no credit history. To obtain that first U.S. credit or credit card can be difficult, and sometimes costly. Some internet firms offer publications on how to establish a credit history in the United States. Although such publications are probably unnecessary, immigrants to the United States can face a variety of obstacles when trying to obtain credit for the first time. These include racial profiling, fee harvesting, the language barrier and an unfamiliar legal process, just to name a few. Racial profiling is the process of singling out people of a certain race and suspecting them of certain behaviors. In the world of credit, this means that people of certain nationalities are considered to be bad credit risks.

It is sometimes based on race, but it can also be based on the nationality of one's surname or where one lives, a process called "redlining". For example, the same credit card company may send two vastly different offers to two Americans. The first person may have a surname or an address that ties them to a particular ethnic group. This person may receive a non-english language offer with a high interest rate, a low credit limit and a high annual fee, while the person with a surname like Smith or Jones may receive an offer with far more advantageous terms.

"Fee harvesting" is a practice with which many immigrants are unfamiliar. The credit card that is offered has a low credit limit and one or more high upfront fees. As soon as the immigrant accepts the card, the fees are charged to it, leaving very little available credit. There is a good chance that one of the first purchases the immigrant makes will put him over the limit and he will incur still more fees and do nothing to improve his credit history. Of course, all these problems are exacerbated by the language barrier. Sometimes it is difficult for an immigrant to understand the terms of his mortgage or his contract with a credit card company. Many immigrants agreed to sub prime mortgages with high interest rates because they did not understand the documents they were signing. What can an immigrant do if he is unfairly targeted?

Certain practices are illegal, but immigrants may have trouble pursuing them through a court system they do may not fully understand. Language is a factor here, as well. In this situation, an immigrant should seek competent legal help. So what can an immigrant do to establish a good credit history? First, avoid fee harvesting when you obtain that first credit card. Sometimes it makes sense to obtain a secured credit card first. A secured card is one whose available credit is guaranteed by money you put in a savings account. The savings earn interest, but you do not have access to them. Next, make a series of small purchases and pay the balance off every month. Pay medical bills promptly or make payment arrangements.

Ask your utility companies if they will report your on-time payments to a credit bureau. Sometimes they are willing to do so and this can help you establish a credit history. Most of all be patient. Establishing a good credit history may take months of on-time payments. Once you have a good credit history, you will have access to better deals in the future. You'll be able to obtain lower cost financing for your next car purchase, rent an apartment or a car, and even purchase a home at advantageous terms. You won't have to carry large amounts of cash to handle emergencies. Life will become more convenient. Establishing and keeping a good credit history is definitely worth it.

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