You’ve seen it in the movies and your favorite TV shows. Americans value their credit scores more than their hamburgers and for good reason too. A higher credit score (750+ points) means access to the best financial institutions and quick approvals on bigger loans with better interest rates. That’s how you get your dream house, that enviable sports car and live the ultimate American dream.
How is your credit score calculated?
It is calculated by a credit scoring institute called FICO. Your ‘FICO score’ is a three-digit score used to gauge your credit risk as an individual and make credit decisions. It is computed based on your payment history, amounts owed, length of credit history and more. Financial Institutions rely on your credit score to understand your repayment behavior and risk profile before granting you loans and services.
The Immigrant Disadvantage
Immigrants are at a disadvantage when it comes to credit scores for the following reasons:
Starting from scratch
The credit history cannot be transferred when you move from one country to another. The financial reputation built at home will not be transferred when there’s a change in the country.
Lower transaction volume
Unfortunately, immigrants face several difficulties such as opening bank accounts, getting a credit card, renting an apartment and getting a mobile phone contract. A delayed bank account opening and further transactions means the credit score analysis is delayed.
Shorter credit history
As the length of credit history is much shorter, it leads to a lower score as the evaluation is based on fewer transactions. Overall, someone with no credit history will have to pay an additional $50 K to access credit cards, auto, mortgage, student and personal loan. It takes two years to build a good FICO score.
Here’s a table to show you the cost difference in loan repayments when your credit score is fair vs very good:
But there’s something excellent to beat ‘The Immigrant Disadvantage’.
The Leap Finance Advantage
From opening a US Bank Account within India to helping build credit history from Day 1, as well as supporting students through their education, we give a unique advantage to students unlike ever before.
- We’re the only ones with whom students can open a US Bank Account from within India along with a credit card that’s full of perks
- This means that the credit history will start building from Day 1
- When a student takes an education loan from Leap Finance, the repayments will help increase the FICO score.
With Leap Finance, by the time students graduate, they would have a good FICO score to save up to a whopping $50k on loan repayments.
We have empowered thousands of Indian students to do great things on a global platform through our unique services and continued compassion towards their futures. After all, if you’re going to take a Leap into your future, you might as well do it with the best.