TLDR
-
Your credit history, or credit score, is a record of how responsibly you pay back money you borrow
-
Building a U.S. credit history as a student is valuable for Canadians studying in the U.S.
-
A strong U.S. credit score can help you rent an apartment, qualify for a cell phone plan, get better rates on loans and insurance and more
-
The key to building good student credit is to start early and use credit responsibly
Heading to the U.S. to study? This is an incredibly exciting time for you – you’ll make unforgettable memories, meet new friends and learn new things! In the midst of all the excitement, one smart move can help make your student life smoother and set you up for life after graduation: building a U.S. credit history.
While building credit may not be as exciting as campus life, it can help you access better financial products, rent a place to live and even land a job, while in school or after you graduate.
Why building student credit in the U.S. matters
Your credit history – or credit score – is a record of how reliably you pay back any money you borrow. It shows lenders, landlords and even employers that you are financially responsible.
Even if you plan to return to Canada after your studies, having a U.S. credit history gives you added flexibility and options. And if you plan to stay in the U.S.? It’s a must.
A strong U.S. credit score can help you:
-
Rent a place to live: Landlords will often check students’ credit score to determine if you’re likely to pay rent on time.
-
Get approved for loans: Whether you’re applying for a credit card, a car loan, a line of credit or even a mortgage in the future, having a good credit score will make it more likely that your application will be approved.
-
Save on your cell phone plan: A U.S. cell phone plan often makes sense for students. Providers may reduce or waive deposits and offer better plan options if you have a credit history.
-
Get hired: Some employers will perform credit checks as part of the hiring process.
-
Pay less for insurance: With a good U.S. credit history, it may be easier to get insurance to protect your car and belongings – and pay less for your coverage while you’re at it.
7 ways to start building credit in the U.S.
Building credit is a process, but it doesn’t have to be complicated. The key is to show consistent, responsible financial behaviour. Here’s how to build credit in the U.S.:
1. Apply for a Social Security Number (SSN)
While you can apply for credit without an SSN, having one helps ensure your credit activity is recorded accurately.
For Canadians studying in the U.S., you can qualify for an SSN as long as you’re authorized to work and have a job, even a part-time or on-campus one. It’s best to contact your school’s office for international students, as they’ll be able to tell you if you’re eligible to work on and/or off campus. For more information about getting an SSN as an international student, visit this Social Security Administration page.
2. Open a bank account in the U.S.
Having a U.S. bank account may not directly affect your credit score, but having a relationship with a U.S. bank is a strong signal of financial responsibility and can often be a first step toward getting a U.S. credit card.
If you’re an RBC Royal Bank customer, this is easy to do, as you don’t need to be a resident of the U.S. or have a U.S. address or Social Security number to open an RBC Bank U.S. account as a Canadian. To sign up for an account, you simply need to be 18 years or older, live in Canada or the U.S. and have a Social Insurance Number and government ID.
3. Apply for a U.S. credit card
Using a credit card responsibly is one of the fastest ways to build credit. You have options, even without a U.S. credit history:
-
As a Canadian, you can apply for some U.S. credit cards without a U.S. credit history, as your Canadian credit history can be used to qualify you.
-
Secured credit cards – where your credit limit equals your deposit – are an easy way to start. Over time and after a pattern of solid repayment history, many students upgrade to an unsecured card.
4. Pay your balance on time, every time
This is a huge factor in building good credit. Even if you can’t pay your full balance each month, remember to at least pay the minimum.
5. Keep your balance low
How much credit you use in comparison to the amount of credit available to you is called your “credit utilization.” Experts recommend keeping your credit use below 30% of all your available credit sources for a higher credit score. That means if your monthly credit card limit is $3,000, try to keep your balance under $1,000 every month.
6. Pay your other bills on time
Paying your other bills – such as your rent, utilities, internet and phone – also contributes to your credit history. Consider setting up automatic payments, so you never miss a due date!
7. Keep an eye on your credit score
When your credit rating is established, you can request a free copy of your credit report from all three major credit reporting agencies in the U.S.: Equifax,® Experian® and TransUnion.® You can also easily request your report online at AnnualCreditReport.com or by calling 1-877-322-8228.
The rundown on student credit
Building a U.S. credit history as a student is one of the smartest financial moves you can make. It can help you save money, access better services and prepare for life after graduation – whether or not you stay in the U.S.
By starting early and using credit wisely, you’re not just managing your student life, you’re investing in your financial future.
Studying in the U.S.?
Sign up for our cross-border bundle to set yourself up before you head south!
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
