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How to build credit in the U.S.

Building a strong credit history is invaluable for international students in the U.S. Good credit can help you secure loans, rent apartments and even improve job prospects. However, establishing credit in the U.S. can be challenging without prior history. This article outlines key steps to build your credit, setting you up for financial success during and after your studies.

What is credit and a credit score?

“Credit” refers to your ability to borrow money or access goods and services with the understanding that you’ll pay for them later. When you use credit, such as a credit card or loan, most U.S. lenders report your payment history to credit bureaus. This information is used to create your “credit score,” a three-digit number representing your creditworthiness.

A credit score ranges from 300 to 850, with higher scores indicating better credit. This score is based on factors such as your payment history, the amount of debt you have, the length of your credit history, the types of credit you use, and recent credit inquiries. Lenders use your credit score to determine your lending risk; a higher score often results in better loan terms and lower interest rates.

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Why building credit is important for international students

As an international student, building credit in the U.S. is crucial for several reasons:

  • Access to financial products: A good credit score opens doors to loans, credit cards and other financial products with favorable terms and lower interest rates.
  • Renting an apartment: Many landlords check credit scores when screening potential tenants. A strong credit history can make it easier to secure housing if you’re planning on moving to the United States.
  • Employment opportunities: Some employers, particularly in finance or government, may check your credit as part of the hiring process.
  • Utility and phone contracts: Utility companies and mobile phone providers may require a credit check before offering you a contract. A good credit score can help you avoid deposits or obtain better terms.

Steps to build credit in the U.S.

1. Apply for a secured credit card

A secured credit card is one of the easiest ways to start building credit in the U.S. Since you may not have a credit history, a secured card requires you to make a cash deposit that serves as your credit limit. Use the card responsibly, make on-time payments, and your credit score will start to build.

Tip: Ensure that the secured card reports to all three major credit bureaus (Equifax, Experian and TransUnion) to maximize your credit-building efforts.

2. Become an authorized user

If you have a trusted friend or family member with a good credit history, consider asking them to add you as an authorized user on their credit card. As an authorized user, you would benefit from their positive credit history as long as they continue to make timely payments. This is a privilege not to be abused and can help you establish credit quickly.

Tip: Ensure the credit card issuer reports authorized user activity to the credit bureaus so it counts toward your credit history.

3. Apply for a credit-builder loan

Credit-builder loans are specifically designed to help individuals build credit. These loans work by placing the borrowed amount in a savings account or certificate of deposit (CD). You make regular payments, and once the loan is paid off, the funds are released to you. This process helps establish a history of on-time payments, boosting your credit score.

Tip: Look for credit-builder loans offered by credit unions or community banks, which may have more favorable terms.

4. Pay your bills on time

Making on-time payments is one of the most important factors in building and maintaining a good credit score. This includes not only credit card bills and loans but also rent, utilities and other recurring expenses. Late payments can negatively impact your credit score, so staying on top of your due dates is crucial.

Tip: Set up automatic payments or calendar reminders to ensure you never miss a payment.

5. Apply for a student credit card

Some credit card issuers offer student credit cards that are easier to obtain for those with little to no credit history. These cards often have lower credit limits but can be an excellent way to start building credit if you use them responsibly.

Tip: Keep your credit utilization low by only using a small portion of your available credit and paying off your balance in full each month.

6. Monitor your credit report

Regularly check your credit report to ensure all the information is accurate and current. You’re entitled to a free credit report from each of the three major credit bureaus once a year. Monitoring your credit report can help you spot any errors or fraudulent activity that could harm your credit score.

Tip: Use a credit monitoring service to keep track of changes to your credit report and receive alerts for any suspicious activity.

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Tips for maintaining good credit

  • Keep your credit utilization low: Try to use no more than 30% of your available credit at any time. High credit utilization can negatively impact your credit score. Manage your credit use with study abroad budgeting.
  • Don’t apply for too much credit at once: Each time you apply for a new credit card or loan, a hard inquiry is made on your credit report, which can temporarily lower your credit score. Apply for credit sparingly and only when necessary.
  • Build a long credit history: The length of your credit history affects your credit score, so keep your oldest accounts open and active. Closing old accounts can shorten your credit history and lower your score.

An MPOWER Financing student loan can help you build credit

MPOWER Financing is dedicated to financing education for international students planning to study abroad.

  • Varied loan options: MPOWER offers fixed-rate loans ranging from US$2,001 to US$100,000 total and provides competitive interest rates. Additionally, students can benefit from a 0.25% interest rate reduction through automatic payments. MPOWER loans are available even if students have existing loans from other sources. On-time international student loan repayments can help build your credit score.
  • Streamlined loan accessibility: MPOWER’s international student loans do not require a cosigner or collateral, which simplifies the borrowing process. There are also no prepayment penalties.
  • Efficient online loan process: MPOWER’s fully digital loan process ensures convenience and accessibility for students worldwide. With rapid approval and seamless fund disbursement, the process is straightforward, including a quick 30-second eligibility check.
  • Continuous support and assistance: At MPOWER Financing, funding a student’s education is only the first step to success – not the last. That’s why every MPOWER student gains access to exclusive career, visa and financial resources through our Path2Success program.

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FAQs

How long does it take to build a good credit score?

Building a good credit score can take several months to a few years, depending on your credit behavior. Consistently making on-time payments and keeping your credit utilization low will help you build a solid credit score over time.

Can international students get a credit card without a Social Security Number (SSN)?

Yes, some credit card issuers allow international students to apply for a credit card using an Individual Taxpayer Identification Number (ITIN) instead of an SSN. However, having an SSN can make it easier to apply for credit.

Will my credit history from my home country transfer to the U.S.?

No, credit histories don’t transfer between countries. You’ll need to start building your credit history from scratch once you arrive in the U.S.

What should I do if I have no credit history in the U.S.?

Start with a secured credit card, a credit-builder loan or become an authorized user on someone else’s credit card. These are all effective ways to begin building your credit history.

*Rates as low as 9.99% (10.89% APR) available only for the fall 2025 semester, and you must submit your application by January 31, 2025. This interest rate and APR includes a 0.25% discount for automatic recurring payments and a 0.75% discount from our limited-time early planner promotion.

DISCLAIMER – Subject to credit approval, loans are made by Bank of Lake Mills or MPOWER Financing, PBC. Bank of Lake Mills does not have an ownership interest in MPOWER Financing. Neither MPOWER Financing nor Bank of Lake Mills is affiliated with the school you attended or are attending. Bank of Lake Mills is Member FDIC. None of the information contained in this website constitutes a recommendation, solicitation or offer by MPOWER Financing or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

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