Q: I'm in the US with an H-1B visa. What is the best way to build some credit so I can get a car loan?
Q: I'm in the US for a couple of months with an H-1B visa, and I would like to know the best way to build some credit. I bought a car with cash, and I want to finance another one, but since I don't have any credit history it is really hard to get a car loan.
A: Your H-1B visa means you're temporarily working in the U.S. with the help of an employer who's sponsoring you. Having a job is a start to getting financing (prospective lenders like to know you have income), but a job alone isn't enough. To build the credit necessary to finance a car, you also need to establish a track record of paying certain monthly bills on time here in America.
Since you are a foreign national, unfortunately whatever credit history you may have created abroad doesn't automatically transfer to you while you are in the U.S. So you'll need to start fresh and create a credit history from scratch.
The first step is having a tax ID number, or a Social Security number. Fortunately, you're entitled to one.
According to IRS Publication 519, U.S. Tax Guide for Aliens, as a holder of an H-1B visa, you pay Medicare and Social Security taxes. (Some people with H-1B visas are even eligible for Social Security benefits, as long as they've contributed to the Social Security system for at least 10 years). You also pay state and federal taxes. To do all this, you obviously need a Social Security number.
With that Social Security number, you can apply for a secured credit card or a credit card for limited credit. It's unlikely that a bank would issue you a traditional line of credit, simply because you currently have no credit history at all. So start by seeking a secured card where you post a deposit of perhaps $500 or $1,000, and it serves as your credit limit.
Then make regular charges on the card, make monthly payments on time, and after 6 months you'll have at least a bare minimum of a credit history that lenders can work with. After you demonstrate financial responsibility with a secured card, you can try for an unsecured card. With both of those in your credit files, that should be good enough to help you qualify for financing for an automobile.
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