How do you establish your credit rating and rental history in one country when you're from another one?
February 7, 2008 9:03 PM   Subscribe

How do you establish your credit rating and rental history in one country when you're from another one?

Cue the song "go for credit in the straight world..."

MeFi’s, help me figure this one out… and sorry, there's no 'finance' category, so 'grab bag' it is...

Here's my situation – slightly tricky to deal with. I lived my entire life in one country, have a great credit history there (paid off a student loan very quickly, paid taxes etc.) - but have no credit history in my current country. Unfortunately I'm separating from my spouse, so I'm trying to prepare for renting a place on my own.

The problem is being 'invisible' - having no credit history in the U.S. We shared bank accounts and credit cards - most accounts written jointly - and I don't have my own credit card here. I *do* have a Canadian credit card that's all paid off - just maybe a $100 bucks to make sure they don't close it on me. I opened a personal U.S. bank account on my own, and suppose I could try and get a credit card on that personal account – although I don’t know what I should do to help establish credit, since suddenly spending money on a credit card for spending’s sake is not something I want to do, unless I can pay it back immediately. I don’t like debt, and want to find a way to translated this fact into reliability for a prospective landlord. I'm at a steady white color job, and the prospects for employment in my field are currently pretty good *knocks wood*.

So the question is, what can I do to establish that I’m a good solid, not-in-debt citizen? I can show prospective landlords my credit report from my home country (believe me, in my area of the country landlords are asking for credit reports and first borns). I would love to be able to show my rental history, but I lived at home with my parents, and we rented an apartment, usually with a check paid with my mum’s name on it. Once I started working I helped pay for rent – although my mother and I had a shared bank account, and she inevitably would sign the checks, so that’s kind of useless. I could ask the landlord (who’s known me for at least ten years – owners of the building even more) at my mother’s place to see if he could write me a letter of reference – basically saying I’ve lived in one place my whole life, we always paid our rent on time, were members of our tenant’s association – but wonder if that’s going to be hokey to a new landlord.

What can I do to show them I’m reliable and not a flake – a good credit report (paying off $27K in 3 years has to count for something!), resume, personal references from 3 or 4 people in lieu of a US credit history… anything else? I have a feeling if I could sit down and explain my situation it would be ok – but if a landlord sees ‘no credit history’ they might freak – and I don’t blame them.

Help! Any ideas? Who should I talk to about this? The idea of living in a motel because I can’t get into anything else is not looking fantastic…
posted by anonymous to Grab Bag (9 answers total) 3 users marked this as a favorite
I think the easiest thing to do would be to get a credit card (even one with a low maximum), use it for purchases and timely pay your bills. I don't believe any U.S. creditors or credit ratings agencies will give you, uh, credit for paying off your education loans in Canada (generally education loans are given a low weighting unless you default on them, as I understand it).

I would advise you to look into the same resources directed at borrowers with bad credit, like this.
posted by Admiral Haddock at 9:14 PM on February 7, 2008

First: don't panic.

I had to do this in the US and, frankly, the only answer was "time". Get a credit card (however low-limit), use it, and pay it off religiously. The offers for variously usurious credit cards will begin rolling in to your letterbox shortly thereafter. Make sure you pick the ones with no annual fees, with grace periods, and keep a few "rotating", ie open but completely paid off.

You get a good credit rating by having a lot of credit that you manage well and "don't seem to need" -- ie no unpaid balances. Building this up takes time. Things that you would normally buy (bills, groceries, etc) -- buy them with your credit card, then pay it off before the grace period expires.

Sure, get the letter of reference from your previous landlord -- it could make the difference. See if your employer will sign a letter confirming your employment, which might help (how long you've been there, what you earn is generally the most they'll do -- they won't ever make forward-looking statements about your future employment, that would be crazy)

Then while you work on your credit rating, you could live with flatmates, sub-let, or perhaps rent from a landlord who owns and lives on the premises too (eg a half an owner-occupied duplex). Craigslist is the go-to place for finding such things. But you will need good credit to get into any random Large Apartment Building.

It's going to be ok.
posted by 5MeoCMP at 10:01 PM on February 7, 2008

I did this in Canada (same deal as the US) and it was hard the first couple of years. I had to put a security deposit against a credit card and use that as my leverage into the world of credit. Two years later I got a mortgage by putting 25% down. Once I had a mortgage and a couple of credit cards there was no issue.
posted by unSane at 10:45 PM on February 7, 2008

Instead of buying stuff with cash, get a credit card, buy stuff with it, then send the cash funds to the credit card account. You're still paying with cash as far as your personal preference to avoid debt is concerned, but you're also establishing a credit record.

(It's actually better to pay it off after a while rather than right away, but as you prefer not to be in debt, do as you please)

Have landlords actually rejected you based on lack of credit history? If not, it might not be as bad as you fear - my landlord, when he found out I wouldn't have a credit record just decided not to bother doing a credit check (since it was pointless), and passed the savings ($25) to me. But I guess it depends on where you are and how solid the rest of you looks to the landlord. And the landlord.
posted by -harlequin- at 11:37 PM on February 7, 2008

I had this same issue moving to the US. Large apartment rental companies didn't really want to have anything to do with me, but the place I scored, a) was willing to and did pull my Canadian credit report, and b) went for it after writing a letter saying "Hey, I'm a really ideal and respectful tenant, I love this place and will be perfect for it" (I also explained my education/job history, since I was also self-employed simply living off savings for a while, so no employer to show for).

I agree with others to mostly stay away from the big property management companies, stick with smaller companies/individuals, and generally do something to stand out and look more appealing.
posted by stephthegeek at 12:03 AM on February 8, 2008

How to establish good, USEFUL credit history quickly: start with a VISA or MasterCard, of whatever limit you can get. If you have to, get a secured card. Use it as advised above -- buy necessities or pay utilities with it, and pay it off monthly. Even just a year's worth of nice solid revolving credit with a major card makes your report look good. Revolving credit means you can use it every month and can make payments every month. Carrying a balance is not necessary, but won't hurt your rating if you're making regular payments. Having a lot of open credit is not necessary, and can actually be a danger signal to another lender if you are applying for more credit (potential for overcommitment to debt).

Not quite so useful: bank loans and carpet/furniture financing. These are closed-term credit -- you use it once and pay it once. A good history on an account like this is great if you have it, but don't go looking for it just to establish credit history, because it isn't as important.
Not very useful at all: department store cards, utilities, student loans, and rent-to-own. These forms of credit have capricious reporting behaviour and aren't usually the most accurate measure of a person's creditworthiness.
Totally not useful: taxes. This won't even be on your credit report unless you've got a judgement to pay against you, and even so, an otherwise good report overshadows that.

Sometimes, when a landlord pulls a credit report on a prospective tenant, it isn't just to check if you pay your bills. The presence of a report at all, regardless of the content, is already a clue that the name and previous address are genuine and the person exists (i.e.; you aren't using an alias). Often this and a confirmation of employment is good enough to get you into a rental home.

The cards you held with your husband -- were they truly joint cards? If so, you will already have a credit history. A jointly held account means that each of you would be held responsible for the payment of the account, and each of you would have the account reporting to your individual credit reports. If you were only a supplementary card holder, meaning it was completely his account, but you got to have charging privileges and a card with your name, you won't have the history. If you don't know which it was, consider whether he added you to an existing account or whether the two of you applied for it together. It is unlikely an existing personal credit card would become joint.

It is a good idea for every adult human who plans to participate in modern society to establish and maintain a credit record, but I would especially recommend these steps for people moving to a new country. Double-especially for people moving to new countries to marry someone.
posted by Sallyfur at 1:21 AM on February 8, 2008

I moved here from the UK and established credit by taking out a $300 secured card, using it and paying it off as everyone upthread has suggested. I have rented places without credit, my landlords called my employers to establish that I did really have a job, and I gave references for the UK; all of which seemed acceptable. These were all rentals directly from the landlord, I didn't bother with agencies - I felt they wouldn't want to deal with me w/out a credit report.
posted by poissonrouge at 9:39 AM on February 8, 2008

As others have said, start with a US credit card. Start with a sympathetic US banking institution that works with foreigners. Bank of America will sometimes pull Canadian credit history for credit card applications (call and call and call around until you find somebody at a branch that will do this for you; you may have to call every branch in town). I bank at First Tech Credit Union, which is friendly to foreigners. You probably don't qualify but on the off-chance that you do, you should check it out.

Re: apartment rentals. I got one without a US credit history because I did it through a corporate relocation service. Do you know anybody that did a corporate relocation recently? Can you ask who their broker was for apartment rentals? Can you get in with their broker (they may take non-corporate clients, it can't hurt to ask). Can you ask where they toured apartments?
posted by crazycanuck at 11:24 AM on February 8, 2008

Please do not advise anonymous to carry a balance. It does absolutely nothing besides make the bank more money. It certainly doesn't improve one's credit rating.
posted by oaf at 2:34 PM on February 9, 2008

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