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back to index backGLOBALtalk August,  2006


Relocating to the United States? Get Ready to Rebuild Your Credit

Foreign nationals have a wealth of challenges awaiting them as they enter the United States for employment. From visa issues to cultural acclimation, the relocation process is rarely a smooth one. Bienkowski outlines the importance of credit for transferees, and offers tips for beginning the credit-building process.

Do not take it personally when a bank employee informs you that your credit history in your home country means absolutely nothing in the United States.

Offering referral letters or names and contact information of bank personnel from your home country will not help either when you are trying to secure a loan.

I was staggered at the financial institution’s unwillingness to accept my previous credit history,” said Brian Valentine, CEO of Crown Relocations Americas region, Los Angeles, CA, and an Invercargill, New Zealand, native. I was, at the time, a person of 48 years and had been managing director for Crown in New Zealand for over 12 years.”

Obtaining a credit card to help establish and build credit is also vexing. Many credit companies treat international transferees as a risk; they are sometimes grouped with students, the unemployed, and bad debtors. The best case scenario is that the transferee may be proffered a low-limit credit card (sometimes called a secured” credit card)— which usually requires a deposit—or granted a loan with prohibitive interest payments.

A secured credit card can be used anywhere that MasterCard or Visa is accepted. Ideally, a transferee should choose a secured credit card that reports his or her monthly payment history to all three major U.S. credit-reporting agencies. Transferees should speak to their bank representatives to ensure their credit card reports are sent to these agencies—that will speed up the credit-building process.

Inherent Risks
However, obtaining credit cards and loans can be tricky and financially dangerous. When negotiating a loan, transferees—or any other persons for that matter—should not pay advance fees. The Federal Trade Commission reported that in one year nearly 4.5 million consumers paid advance fees but did not receive the promised loans or cards. Credit card scams can be particularly deceptive to the uninformed transferee.

Be very suspicious of credit cards that guarantee you will be approved,” said Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc., Fort Lauderdale, FL. These come-ons usually fall into one of two categories. One is cards that may sound like major credit cards but only can be used to purchase merchandise from the company’s catalog. This merchandise is mostly overpriced and requires large down payments. The second method offers major credit cards but they carry very high fees. You may get a starting credit line of $300, for example, but the fees on the first bill may total $250 or more, leaving you with very little available credit.”

Dvorkin also strongly suggests paying your bills on time. If you pay your debts late, a late payment likely will be reported to the major credit bureaus and will stay on your credit report for seven years.”

Establishing Credit
Establishing credit also will help transferees rent or purchase a car—something that usually is necessary in the United States considering the size of the country and the population’s inclination to drive. For many new arrivals in the United States, purchasing or leasing a vehicle is the first order of business,” said Lynne Griffiths, business development manager, North America, for International AutoSource, Woodbury, NY. Unfortunately, a visit to a local dealership quickly will prove that no credit equals poor credit, making it very costly to obtain transportation. Despite healthy salaries and generous car allowances, time and time again international customers are unable to purchase or lease a vehicle.”

Many relocation companies establish relationships with organizations to facilitate the buying or leasing of a vehicle. Through relationships with major automobile manufacturers and financial partners, international transferees can be eligible for low-rate financing and leasing programs even without a U.S. credit history.

The bottom line is be prepared for the inconvenience of having to rebuild your credit and know who to ask for help. Many transferees look to their employers for assistance concerning the cultivation of relationships with local banks in the United States. If a transferee’s employer already has offices in the United States, then it also will have a bank that it does business with on a daily basis. With ample time to prepare for relocation, a transferee can open an account in the United States prior to his or her arrival. A social security number no longer is required to open accounts with some banks, but funds cannot be accessed until the transferee arrives in the United States and shows proper identification at a local branch.

Using the company’s relationship can fast-track the process of first obtaining a bank account and then a credit card and possibly a loan,” said David Muir, chief executive officer of Crown Europe, Middle East, and Africa division, Prague, Czech Republic. Once an affiliation with a bank is established, transferees can investigate the possibility of applying for credit cards at local retail stores.”

However, the transferee must make payments on time and pay careful attention to the interest rates that retail stores charge on their credit cards. Transferees should explore their options to ensure that they are getting the best possible deals and rebuilding their credit in a smart and prudent manner.

Source: Mobility magazineGAI


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