Can Undocumented Immigrants Apply For A Credit Card?

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After arriving to the U.S., an undocumented immigrant must deal with so many things that are foreign to them. Among them: the U.S. financial system, which can be tough for even those born in the States to navigate.

Getting a credit card may be one of the items on the financial to-do list of an undocumented immigrant. Undocumented immigrants can apply for a credit card in the U.S., but they might need to jump over some hurdles to do so. These could include obtaining a federal tax ID number or qualifying for a secured credit card.

"Many people we speak to in the immigrant community struggle with accessing credit because they have not had access to financial education about their rights in the financial system," says Adina Appelbaum, immigration attorney, accredited financial counselor and co-founder of Immigrant Finance.

Immigrants tend to rely on high-cost alternative financial services, such as check-cashing companies, payday lenders and pawnshops, at a great expense. Meanwhile, traditional banks’ services tend to be much more reasonably priced. An undocumented immigrant's financial education should focus on high-cost alternative financial services, says Magnus Larsson, co-founder and CEO of Majority (a digital bank meant for migrants).

No federal law prohibits an undocumented immigrant from getting a credit card in the U.S., Applebaum explains.

Based on their corporate practices, some credit card issuers require an applicant to provide a Social Security number. However, many credit card issuers accept an individual tax identification number as an alternative to a Social Security number. The nine-digit ITIN, though similar to the nine-digit SSN, is issued for tax purposes and does not make you authorized to work in the U.S. nor eligible to receive SSN benefits.

Even with an ITIN, an applicant might not be approved for a credit card if they lack a credit history. Having no credit history is not inherently bad, it only means you have never used any credit-building financial products, such as a credit card or loan, in the U.S.

If a Social Security number or ITIN isn't an option, some credit card issuers might accept an applicant's foreign passport or U.S. driver's license. Yet another alternative is Nova Credit's Credit Passport, which an issuer can use to look at an applicant's overseas credit history.

Credit card issuers that do not require an SSN include:

Contrary to popular belief, there are many alternative ways an undocumented immigrant, with no credit history recorded in the U.S., can get a credit card.

Unlike an unsecured credit card, a secured credit card typically requires a cash deposit that serves as collateral. The collateral protects the card issuer by securing repayment of any debt you may accumulate on the card. The credit limit for one of these cards is typically 50 percent or 100 percent of the deposit amount.

The goal of a secured credit card is to help someone build their credit history and then graduate to a traditional unsecured credit card. Most, but not all, secured credit cards report a cardholder's payment history to the credit bureaus, which slowly helps your credit score increase. If this information isn't reported, then your credit score won't increase, so be sure to apply for a secured card that regularly reports your payment activity.

Another way to obtain a credit card is to find a co-signer. Under this arrangement, someone else (often a relative) agrees to cover card payments or the entire balance if the main cardholder isn't able to do so. Keep in mind, though, that many of the major credit card issuers don't allow co-signers.

You could also ask to be added as an authorized user on someone else's credit card. As an authorized user, you get your own card connected to the primary cardholder's credit line. This allows you to use the card for spending and enjoy any card benefits.

The account holder is financially responsible for the monthly card payments and the entire balance on the card, though of course you can make arrangements with the primary cardholder to pay them your balance every month. The person whose card account you join is usually a spouse or relative, but a friend is also possible — as long as they’re trustworthy and financially responsible.

If you or the main account holder makes on-time payments each month, it will positively reflect on both your credit reports, since the payment history is regularly reported to the credit bureaus. It could be quite advantageous for both parties. Some credit issuers do not report the authorized user's activity, so be sure your issuer does before becoming a user.

Another option is applying for a joint credit card account with someone else, like a spouse or family member, which basically makes both of you the primary cardholders and responsible for covering the balance. The main appeal — perhaps with both your incomes, the issuer will feel more confident to extend you credit.

As with an authorized user, each joint account holder's payment activity generally is reported to the credit bureaus. So, if payments are made on time and regularly, you could see your credit history gain strength. However, note that many card issuers no longer offer joint credit accounts.

Some card issuers might be willing to approve an undocumented immigrant for a traditional unsecured credit card even if they don't have a credit history. It's worth noting, though, that cards for no credit history might come with drawbacks like a higher-than-normal interest rate or a lower-than-usual credit limit. Nevertheless, if you are diligent in not overcharging your card and paying your bills on time every month, these cards work just as well in building your credit.

Applebaum says that in many other countries, credit is less commonly used than in places like the U.S. Therefore, an undocumented immigrant may arrive in the U.S. without a credit history.

"For immigrants who do have credit histories from their home countries, many are not able to transfer their credit histories once they arrive in the U.S., so they have to start from scratch," she says. "Additionally, people who do not have immigration status or who have uncertain, temporary types of status or are in between statuses can have difficulty opening credit cards and not know whether they are eligible to have them in the first place."

"Learning how to manage a credit card responsibly and pay it off in full every month over time is one of the best ways to build a strong credit score through payment history and length of credit history," Applebaum says.

Payment history makes up 35 percent of your FICO credit score, the most widely used scoring model, while length of credit history represents 15 percent. Here are some other tips you could try to build your credit:

Working your way through the U.S. financial system as an immigrant, including the process of getting a credit card, can be intimidating. "The system is not built for people that are not born and raised here when it comes to finance," Larsson says.

Fortunately, credit cards are available to undocumented immigrants, though they may be tough to qualify for. And, there "is no shortcut," Larsson explains.

You don't necessarily need a Social Security number to qualify for a credit card. In addition, several credit options are available for undocumented immigrants who hope to obtain a credit card. These include a secured credit card, which requires a cash deposit, or a credit card designed for someone who lacks a credit history. By putting in some work during the application process and being responsible with credit, an undocumented immigrant may join the more than 80 percent of adults in the U.S. who have credit cards.