How to Build Credit in the U.S. as an International Student

Find out how international students can build credit with student loans, banking, and more.

When you’re studying abroad in the United States as an international student, building credit may not be a top priority. However, if you plan on living and working in the U.S. after school, a good credit score can help you secure an apartment, take out a car loan and even find a job. In this brief overview, we’ll look at the basics of credit, why it’s important and how you can build credit in the U.S. while you’re still an international student.

What’s a credit score?

Your credit score is a three-digit number that tells lenders, landlords and even potential employers how reliable you are when it comes to paying your loans and bills on time. On most scales, credit score ranges from a low of 250 or 300 to a high of 850 or 900. A credit score above 600 is average. Good scores are in the 700s, and very strong scores are 770 or more.

Credit scores are determined by credit bureaus. These are companies that collect data from companies that people owe money and make payments to. Credit bureaus track the total amount you owe, your payment history and other information, and they use that data to determine how risky it is to lend you money or credit. A high credit score indicates low risk, which means companies are more likely to lend you money. A low credit score suggests high risk, which makes it harder to get a loan.

Why you should care about how to build credit in the U.S.

Good credit – or a high credit score – can help you achieve a lot of things during and after school.

Private education loans. If you plan on taking out additional loans for your education or refinancing existing loans, a good credit score could help you secure a loan with a lower interest rate.
Housing. Many landlords and leasing offices will consider your credit score when deciding whether to rent an apartment to you.
Car loans. When applying for an international student car loan to purchase a vehicle, your credit score will be a significant factor in getting approval and in determining the interest rate for which you’re approved.
Credit cards. Credit card companies require a certain credit score before they will issue you with a credit card.
Employment. When you’re interviewing for jobs, employers may look at your credit score to see how reliable you are at taking care of your financial obligations.

How to improve your credit score

Here are a few suggestions on how to build credit in the U.S. as you study abroad as an international student.

Get a taxpayer identification number (EIN) or Social Security number (SSN). These numbers are given by the U.S. government. Companies use these numbers to report information about your financial transactions. Credit bureaus use them to keep track of your credit history.
Open a bank account. Opening and maintaining an international student banking account will help you build a financial history faster.
Apply for a credit card. A credit card will help you demonstrate good credit practices. By making purchases with credit and paying your bills regularly, you show you can reliably manage your money and are a good risk to lenders. If you’re not eligible for your own credit card, check with family members to see if you can become an authorized user on their credit cards.
Make payments on time. When paying your school bills, rent, credit card bills, utility bills, school loans and bills for any other lender or company, be sure to make payments on time. Missing payments or always being late with payments can significantly reduce your credit score.
Ask companies to record on-time payments. Many companies won’t automatically report your on-time payments to credit bureaus. Asking them to do so may help your credit improve faster.
Don’t max out your credit. Utilizing 30% of your available credit or less will help to increase your credit score. For example, if you have a credit card with a US$1000 limit, try to keep your balance at US$300 or below. This shows lenders you know how to use credit responsibly.

It’s important to remember that building good credit doesn’t happen overnight – it can take up to 12 months of responsible money management to improve your credit score.

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How to build credit in the U.S. with your student loan repayment

Repaying your international student loan on time is a great way to build credit in the U.S. As your studies are coming to an end, contact your loan servicer to find out exactly how much you owe and when you need to start repaying.

Depending on your repayment terms, you may have several options for how quickly you’ll need to pay off your international student loan. Some repayment plans require fixed monthly amounts for up to 10 years, while others may allow you to start with lower payments at first and then make larger payments as you begin to earn more money.

By prioritizing your loan payments and making sure you always pay on time, you can demonstrate your creditworthiness and improve your credit score.

How to build credit in the U.S. with International Student Loan

International Student Loan has been helping international students finance their studies since 1998. Today, we offer helpful tools, information and resources that simplify the world of educational loans and financing.

We know it’s not easy to fund an international education. Our website and blogs are designed to keep you informed about your options and help you make smart financial decisions about your education and your credit. Whether you’re looking for information about financial options in specific countries, like international student loans for African students, or how to get a loan to study abroad in the United States without a cosigner or how to build credit in the U.S. while you’re still a student, International Student Loan is here to help.

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FAQs

What are interest rates on student loans?

An interest rate on a student loan is a percentage of the total amount of money you borrow that must be paid back in addition to the amount of the original loan. The higher the interest rate, the more money you’ll have to pay.

What is a credit history?

Your credit history is a record of how reliably you have made payments on bills and paid back loans over time. Lenders consider your credit history when deciding whether to loan you money.

What are credit bureaus?

Credit bureaus are companies that collect data about the credit history of individuals and make that information available to lenders, credit card companies, financial institutions, landlords, employers and other interested parties. In the United States, there are three main credit bureaus: Equifax, Experian and TransUnion.

How does your credit history affect interest rates?

The better your credit history – or the higher your credit score – the lower your interest rates are likely to be. That’s because a good credit history gives banks and lenders more confidence you’ll pay back your debts on time.