New To The U.S? No Credit? Here's What To Do.
Updated: Jul 29, 2019
You've moved to the U.S from another country and you are in need of a car to get around. Having your own vehicle definitely gives you more freedom whether it is used for getting to and from work, getting the kids to their schools and activities, or getting out and doing some traveling. You need a reliable car and need to finance some of it, but you don't have any credit in the U.S. What do you do?
What is credit?
Credit is the comprehensive history of all of your financial transactions. By using your Social Security Number, credit bureaus in the United States compile reports using information received from lenders, banks, and credit card companies, to name a few.
Credit bureaus such as Equifax, TransUnion and Experian issue a Credit Score for anyone with consumer history and a social security number. If you have a credit score, it can range from 350 to 850, with 850 being the highest. This score can fluctuate frequently as you add or payoff credit. Lenders use this score to determine whether or not they want to loan money to you. As well as to determine interest rates based on how good your credit score is.
Most Americans have some sort of credit history by the time they reach adulthood. They have bank accounts opened by family members, shared credit cards with parents, and even student debt that contributes to credit scores.
But if you’re an international who has recently come to the U.S., you most likely haven’t engaged in this yet. You probably don’t have credit history here yet. Additionally, you may not have a Social Security Number.
What's wrong with not having any credit?
Having no credit isn't as bad as having bad credit, however it can make things complicated as you are trying to establish yourself in your new home. Any credit you may have had in your home country does not transfer over to the U.S.
Most applications for loans, credit cards, mortgages, and apartments require a credit check. Some employers also rely on credit checks to determine a candidate’s reliability. Having no credit can make it difficult to find a lender who will understand your situation.
How can I get a car loan with no credit history?
Yes you can. If you do not have a social security number, you will need to get an ITIN or an Individual Taxpayer Identification Number. An ITIN can be requested with the IRS (Internal Revenue Service). Be prepared to provide recent pay stubs from your employer, a current utility bill such as a water bill or electricity bill which shows your name and current address. If you don't have a utility bill because it's in someone else's name, sometimes a recent bank account statement from a U.S. bank will work.
You will need a downpayment. A good rule of thumb based is typically 30% of the vehicle sales price. For example, you are looking at a $10,000 car. You should plan on putting at least $3,000 down.
Be realistic. Chances are likely you are not going to qualify for the low APR's dealerships and lenders offer because you have no credit history for them to base their decision off of. Your first auto loan is probably going to have a higher interest rate than someone who has already established history. The point is to get established. Make 12-18 monthly payments on time with your new loan and then look at refinancing options. Once you have 12-18 months of auto loan history on your credit report, it becomes much easier for other lenders to want to take a chance and offer you credit. Refinancing can help lower your interest rate and monthly payment. You can also choose to pay more than the base monthly payment. The extra money will go directly to principal and help you save on interest.
How can I apply for an auto loan?
If you have the above mentioned documents and a down payment saved up, you can complete an application on our website. If you have already obtained an auto loan 12-18 months previous and want to look at refinancing it you can use this link to complete a refinance application. At AppCore, we work hard to help our customers get loans that meet their needs.
We have a network of independent dealers throughout Minnesota, Wisconsin, and North Dakota that have proven to be reliable and provide outstanding service. You can find one near you via our Dealer Locator.
If you have any questions, you can feel free to reach out to us direct via email at email@example.com or by calling us at 763-233-0477. We're here to help!