Social Security numbers and credit history in the US: a guide for newcomers
Translated from the Arabic original. Read in Arabic
In the United States two numbers shape much of your financial life: your Social Security number and your credit history. Employers, banks and the tax authority need the first; the second decides whether a landlord rents to you and what interest you pay on a car loan. Newcomers start with no history, which is normal, but how you build it makes a big difference.
The Social Security number (SSN)
It is issued by the Social Security Administration (SSA). Citizens, permanent residents and people with work authorization are eligible. Many new immigrants request it as part of the visa process and receive it by mail after arrival; otherwise you apply at an SSA office. The number stays with you for life, so keep the card somewhere safe rather than in your wallet, and only give the number to organisations that genuinely need it, because it is a key tool in identity theft.
The ITIN
If you are not eligible for an SSN but have a tax obligation, the Internal Revenue Service (IRS) issues an Individual Taxpayer Identification Number (ITIN) so you can file tax returns. It is for tax purposes only and does not authorize you to work.
What is a credit history?
Three major credit reporting companies keep a record of every credit account in your name, such as cards and loans, and whether you pay on time. Your credit score is calculated from that record. The two most important factors are always paying on time and not using a large share of your card limits.
Building a history from scratch
The usual route for newcomers is a secured credit card: you deposit an amount as security and it becomes your card limit. Use it for small, routine purchases and pay the full balance every month. After some months of this you will have a history and can usually move to a regular card. You can also be added as an authorized user on the card of a trusted person with a good record.
Interest and debt
A credit history is built through disciplined use, not borrowing. Paying the full balance every month builds a strong record without paying any interest, while letting a balance build up opens the door to very high card interest. For anyone who wants to avoid interest for religious or financial reasons, paying in full every month achieves both goals at once.
Check your reports
You are entitled to free copies of your credit reports from the three companies through the official site set up by law, annualcreditreport.com. Review them regularly and dispute any account you do not recognise: it may be a sign of identity theft.
This article is general information, not legal or tax advice. Laws change, so check the official sources below or the competent authority for your situation. Found a mistake? Tell us.