Simply put, a credit score is a number that tells loan creditors (including loan providers, landlords, or insurance companies) how likely a person is to pay back their loan or credit card on time.
Can I build credit without a Social Security number?
“I think the whole goal is to build a financial profile,” said Lizette Carretero, the director of financial wellness at The Resurrection Project in Pilsen. “Generally, in order for you to qualify for anything, you need a Social Security number. But you can also build credit with your ITIN.” The Individual Taxpayer Identification Number or ITIN may be one of the most important pieces of an undocumented person’s financial profile.
There are a few ways to obtain a line of credit as an undocumented person. The first way is to apply for a credit card, which includes monthly payments. It’s easy to max out your line of credit, so make sure you can pay back the minimum (or full) amount you owe each month.
If you are currently making rental payments, you can also use a rent-reporting service to build your credit, Carretero said.
Establishing oneself in the workforce can be done with a 1099-NEC tax form, even if you’re working a job where you are being paid in cash.
Economic wellness organizations like Ladder Up can assist with acquiring the proper tax documentation to obtain a credit score.
Carretero added that it’s easier to open a bank account with an ITIN, which can also help with getting an ID. Another option is the city key ID, which is honored in banking institutions that can help with opening free checking accounts.
“There is just this aspect of building up that behavior to demonstrate that you do have the capacity to pay back,” she said. “The unfortunate part of this in this space is that you do tend to pay higher interest, higher charges.”
This is because of the risk of a person being deported.
How can I build credit?
Individuals can also look into self-reporting their rent to a service that allows renters to report their rent payments to credit bureaus.
“In some cases, for a home, a lending institution will look at alternative credits,” Carretero said. Lenders might look at rent, utility payments, and more.
“Now you’re even able to use Netflix and Spotify subscriptions to demonstrate that you have paid on time,” Carretero added.