Coming to America – What I Wished I Knew about CREDIT

Who remembers that classic movie “Coming to America”? Hmm Hmm, I know you do. Especially those of us that are of a certain age. Eddie Murphy played the role of a very rich and pampered African prince who travels to New York City and goes undercover to find a wife. It was hilarious watching him stick out like a sore thumb in the American culture.

Many of my Caribbean friends can relate to this phenomena of migrating to the great US of A, albeit not as rich African princes. Our experiences are not as dramatic, but despite living in the same hemisphere there are differences between our cultures that cause angst and even issues for us as we immigrate to the USA. Issues which we hardly talk about.

Most people migrate with stars in their eyes about what life will be in the land of opportunity. Some have the benefit of the experience of family members, while others have no clue what lies ahead. As a friend of mine said “everybody who comes to America has a story to tell”. Of course, these stories are usually about some hardship they faced and hopefully overcame.

One of the first obstacles I was faced with was the issue of CREDIT. I will share with you my experience and what I have learned as an immigrant.

First of all, what on earth is credit?? Of course we know what credit is but WHAT is CREDIT? What do you mean I have no credit? How do I get it?

If you migrated to the US as an adult like I did, this is a rude awakening. First hurdle, it can be difficult to  even open a bank account!! Implicit in almost every banking system I’ve come across is that you have come up through the American society and there are some things that are naturally in place. As an immigrant, of course, it’s NOT. So just getting past that can be a challenge.

My Story

I came to the US after being pretty established in Jamaica. I had gone through a few things financially like purchasing a car and a condo so that was definitely not new to me.

Moving to Atlanta, it is rather difficult to survive without a car. Public transportation is just not that well developed so you don’t have the freedom to live wherever you want if you need to rely on it.

I got off to what I thought was a pretty good start. I had bought a used car from someone I knew. After a few months the car was on it’s last leg(One of the pitfalls when you no longer have the benefit of having a good relationship with your local mechanic, miss that about back home). It had major issues which I wasn’t prepared to spend money on. So I started looking around for a better car.

I stopped by the dealership on my way home from work one night. They had a used 2008 Honda Accord, with low mileage that was calling my name. But of course I could not pay cash. You guessed it, I needed a loan. I was pretty much satisfied with the car and began to feel relief that I will no longer have to deal with the car that was leaking fluid and prone to leave me on some desolate freeway.

Wake Up Call(What I learned)

Your credit history outside of the country does not apply

The finance guy came over. We exchanged pleasantries and then the real business began. He asked me for my SSN, pulled up my information. Then the dreaded words came “You have no credit history”.  What do you mean? I have purchased a couple cars and a house through loans before. I have paid them back all on time. WHAT do you mean? But alas, your history outside of the country counts for nothing. That was lesson #1.

 That led me to my next question: How do you build credit when no one will extend it to you? To that question, although he writes loans all day long, he had absolutely no answer. The system just wasn’t set up to accommodate immigrants like me.

You need credit to build a credit history

I left the dealership very dejected and defeated. However, what I failed to mention before was that the salesman was actually a Jamaican. He took me on as his case study in how to get a new immigrant approved for a loan. Unbeknownst to me, he searched and searched. Good news: he found an institution that was willing to give me a loan. Bad news: it was at a whopping 12%.  He called me in, gave me the low down, talked me through what I was up against. I weighed the pros and cons and decided to bite the bullet and go for it, even if just to build my credit. He advised that I should pay it down early and look to refinance as soon as my credit score began to rise. That was good advice! Lesson #2: You need credit to get credit!

Don’t apply for credit just because it’s offered

As my credit score began to teeter around being just OK, I began getting offers from all and sundry. All the retail stores were offering credit cards; banks, loan companies etc. I resisted the urge to apply for more credit because I felt one was enough for me to worry about for now. I am happy I did. Because I found out that every time there is a certain type of query against you credit history, your credit score drops by a few points, even if you don’t take it. So lesson #3, be very strategic about applying for credit.

At the end of the day, even though I took that car loan out of dire necessity at the time, I used it to springboard my way to purchasing my first home after my son was born. It worked out in the end.

Here is some practical advice from my friend Kim Galeta from KimGaleta.com. She is a personal finance blogger who also migrated to the US from Jamaica. 

1. 1. Start with a cash secured credit card to build your credit faster

   A cash secured credit card is just like a regular credit card, expect it is secured by cash. You must deposit cash to your card before you can make any purchases. These are much easier to be approved and are a great option for people who don’t yet have a credit history.

   2. Join a credit union

   Credit unions often offer much more favorable rates for individuals who are looking to build credit. Check with your employer to see if they are associated with one that you may be able to join.

   3. Refinance

   If you have already taken out credit for a car or other  purchase, consider refinancing after about a year to showcase your credit history.

   

   4. Check your credit score often

   Use free platforms like CreditKarma to check your credit score often. They offer great advice on how to improve your score.

   5. Take it one step at a time

   It can be overwhelming to navigate all you need to know about the credit system in the US. Sign up for free resources where possible and ask for qualified advice before jumping into any credit arrangement.

 

Long story short, a lot of the American consumerism is based on credit and debt. Use it wisely. Save your credit for bigger ticket items like purchasing a home. You need debt but if used unwisely it can be a trap. One that is very difficult to get out of.

Thanks again for stopping by.  I know this is not the “juicy” stuff but I am sure there is someone out there who can learn from my experience. Feel free to share your stories, I can’t wait to hear. I’m sure we can all learn something too.