Immigrants struggle to establish credit in America

Andrew Stuart arrived in Miami from London in 1997 to take a position as vice president of sales planning at Norwegian Cruise Line. He owned a home in England that he rented out when he moved to the States. He came with bank references and a contract for an outstanding job.

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None of it mattered when he rented an apartment. Without a credit history, he had to put down three months' rent as a security deposit. But that was nothing compared to what happened when he tried to lease a car.

"I provided references from my bank, my mortgage and my job contract," Stuart says. He got nowhere. "I had to buy a car and put 35 percent down."

In the first five months of fiscal year 2000 alone, the U.S. Immigration and Naturalization Service approved 81,262 petitions from U.S. companies to permit entry to "specialty occupation workers" from overseas, mainly in the computer industry. That's in addition to the thousands of students who arrive each year to study at American universities.

Creditless in America
Stuart had heard stories about other people having trouble getting credit in the United States, but thought he wouldn't have much of a problem.

"My view was, with a work contract with a reputable company, I would be able to get through those with a little bit of conversation and a little more paperwork," he says. "I had an American Express card for many years in the U.K. When I converted it to U.S. dollars, they gave me a minimal level. The first time I tried to use it, they turned down the purchase. They considered me a new card member ... I thought that was extraordinary. They're such strong database marketers, I had an expectation they would know my shoe size, never mind my transactional history."

American Express spokeswoman Desiree Fish said she couldn't comment on Stuart's specific situation, but said she was as puzzled as he was that an established cardholder would have difficulty moving from one country to another.

"If you're an American Express consumer cardholder and apply to be a cardholder in the United States, we can get you one and turn it around in three days," she said. "It's different if you're a corporation -- you have a little more delay -- but even that is a fairly quick process. You should still be able to get the same credit limit. Once you have a card, it's good anywhere."

Cardholders who experience similar problems can call the American Express special handling unit at 1-800-453-2639.

The credit-history gap
Regardless of their economic standing at home, establishing credit in the United States can be a lengthy and often frustrating process for foreigners. That's because the credit reporting that makes it possible to get approved for a loan in 30 seconds here doesn't really exist overseas.

"Here in the U.S., you have the credit bureaus," says Joyce Tee, chief credit officer at Houston's Metro Bank, which specializes in providing banking services to the Asian community. "In most Asian and Latin American countries, this is not a luxury they have. In other parts of the world, we don't even have this service to begin with. Things like Dun and Bradstreet and Equifax -- it's not available."

Chicago's Labe Bank, where the employees may speak to customers in Serbia, Urdu and Tagalog in the same day, knows well the difficulties in trying to qualify customers for loans. They don't bother trying to run a credit report because there's nothing there.

"In many of these countries, they don't even have a word for mortgage," says Labe Bank President Frank Kross. "Because inflation is so erratic, mortgages are almost unheard of for personal homes."

As a result, Labe Bank does loans the old-fashioned way. There's no credit scoring and no desktop underwriting. They have customers bring in "alternative credit sources," such as receipts from utility and rent payments, to establish a good payment history. They review letters of reference, pay stubs from jobs and records from banks in their customers' home countries.

Family members and friends co-sign for loans or provide a portion of the down payment as a gift.

Metro Bank tells its customers to avoid spending a lot of cash when they first get to the United States.

"That's one of the worst things they do," Tee says. "They should set up CDs and borrow against the money."

They also have to be careful in managing their checking accounts. Writing post-dated checks is commonplace in most of Asia, but considered poor money-management here in the States.

Stuart found the key to his credit nightmare was going through Norwegian Cruise Line's bank in Miami.

It was good advice, says David Tai, president of Metro Bank in Texas. Tai says his bank will accept a customer's employer as a silent guarantor on a loan, especially when the company has a significant relationship with the bank.

That's what friends are for
He recommends that new arrivals seek out people from their home countries and ask them for an introduction to their bankers.

Ethnic business and community organizations, such as a chamber of commerce, and relief agencies may also have recommendations for banks specializing in serving the immigrant community.

Stuart's situation began to change after he was approved for a department store credit card.

"I could only get a credit limit of $100," he says. "I bought something for $100 immediately and paid $10 a month to establish a good payment history."

It took about seven months before the appearance of undeniable evidence that his credit problems were behind him -- a credit card application in the mail.

If there was a benefit to being deemed unworthy of credit, Stuart says, it's that he avoided the credit card debt that plagues millions of Americans.

"It was somewhat challenging," he says. "It forces you to keep your finances under control."

Pat Curry is a freelance writer based in Georgia