What H-1B visa holders need to know about building US credit

For many, the H-1B visa is the stepping stone between the OPT extension on the F-1 visa and Green Card status. 

And, while that sounds simple enough, the H-1B visa is actually quite complex, with numerous exceptions and restrictions which can also have an impact on how you go about building credit history in the US. Because credit is such an important feature of American life, the details in this article will help you prepare for a successful financial future in the US.

How many H-1B visas are issued each year?

The current cap of new H-1B visas issued is set at 65,000 annually. In addition, another 20,000 visas are available for internationals who obtained their master’s degree in the United States from accredited institutions.

Both sets operate on a random lottery system, beginning with the visas reserved for those holding US master’s degrees. Anyone from this group who isn’t awarded an H-1B visa during this round of selection automatically flows into the second round.

To get an idea of selectivity, you should know that there were around 95,000 applicants within each pool on their own (before the first round of approvals).

However, there are typically more than 85,000 H-1B visas awarded annually. The reasons for this vary, but the two primary exceptions are:

• Institutions that are cap-exempt (such as universities).

• Roll-over spots from countries provided with a set number of H-1B visas that don’t reach their quota. (Those unfilled positions are added to the general pool for the following year.) 

Eligibility, privileges and limitations of the H-1B visa

Who is eligible for an H-1B visa? 

Internationals holding at least a bachelor’s degree or its equivalent. In addition to a demonstration of expertise by the potential visa holder, the sponsoring company must also show that no US citizen or permanent resident can perform the necessary functions of the position.

What can you do with an H-1B visa? 

You’ll have the right to work in the US on a non-immigrant visa. If you become unemployed (for any reason), you only have a limited time to secure a new position or visa before you need to leave the country.

How long is an H-1B visa valid? 

The initial period lasts for 3 years, though this can be extended for a maximum of 6 years. However, the USCIS has recently issued permits allowing for less time, a policy which companies are fighting.

When can you apply for an H-1B visa?

Your company must apply on your behalf and do so in April, though work can only begin in September. It’s a complicated process, but one that your sponsor deals with, not you. 

Social Security Numbers and H-1B visas

Credit challenges and opportunities for H-1B visa holders

Although you may be able to remain in the US for up to six years on an H-1B visa, at some point your passport will expire.

Because of this, most lenders won’t be able to provide the same credit opportunities that are available to US citizens.

That’s not to say, of course, that you can’t get credit and start building your credit profile, only that you won’t have the full spread available.

Here’s what you should know about building credit while on an H-1B visa:

Opening a US bank account as an H-1B visa holder

CHALLENGE: You don’t have any credit history when you enter the country. Banks are often reluctant to lend money to non-permanent residents, especially when they are not customers.

OPPORTUNITY: In addition to depositing your salary and handling the bills, a US bank account is essentially the first step to developing your US credit profile. If you don’t already have a bank account in the United States, this will definitely be one of the first things you handle when you enter the country on your H-1B visa.

Maintaining an account in good standing gives your bank reason to trust you when you’re looking for credit in the future (it’s not the only thing they will consider, but it certainly helps).

To open a US bank account, you’ll need:

• Proof of identification
• Proof of your visa
• Proof of address
• Your SSN
• Funds to deposit
• Some banks may also request proof of employment

Each bank has its own set of criteria for opening accounts — and they have their own terms for both checking and savings accounts. Take time to find a bank account with terms that best reflect how you’ll use the account.

TIP: In the US, you’ll find that some banks operate regionally while others are nationwide.

Regional or local banks typically offer lower fee structures and often have a little more flexibility in terms of loans and credit products. But if you’re considering relocation to another state, you may want to consider a national bank. 

Credit product limitations for H-1B visa holders

CHALLENGE: Regardless of the length of time you’ve been developing your local financial history in the US, you’re not going to have the full range of credit products available to you that are available to citizens. Credit products you may have difficulty obtaining are mortgages and other long-term loans.

You’ll still want to aggressively build your credit profile if you have any intention of pursuing an immigrant visa (such as a Green Card) in the future. To say that credit is central to the American way of life is almost an understatement.

OPPORTUNITY: There are a number of ways to do this, many of which will make your life easier while you’re in the US, even if you don’t plan on remaining in the country. 

Credit length limitations for H-1B visa holders

CHALLENGE: Most US lenders and banks will be limited by the expiration date of your current visa. Because of this, you will find it difficult to receive approval for long-term credit opportunities that extend past this time frame.

OPPORTUNITY: You may be eligible for short-term credit via in-store, secured and unsecured credit cards or through short-term auto and personal loans. More on these below. 

Getting US credit cards as an H-1B visa holder

CHALLENGE: If you’re totally new to the US, you’re not going to be offered a standard credit card straight away.

OPPORTUNITY: Because credit is so important in the US, you’ll want to explore obtaining a credit card in order to begin building a strong credit score. Here are a few options you may wish to investigate:

• In-store cards
• Offered by large retailers such as Kohl’s and Target.
• Can be used for in-store purchases (though some allow for use in multiple stores).
• Often easier to get than unsecured credit cards.
• Typically low limits, which can be increased over time.

• Secured credit card
• Offered primarily by national banks and credit providers.
• Can be used anywhere.
• Easier to get than unsecured credit cards.
• Limited to the amount of funds set aside in a deposit account.

• Unsecured credit card
• Offered by a wide range of regional and national providers.
• Can be used anywhere.
• Typically requires some credit history to obtain.
• The better your credit score, the more likely you are to have a higher limit and a lower interest rate.

TIP: Having a good credit score and history is the key to obtaining financing for big ticket items in the future. Scores range between 300 and 850 in the US, and you’ll want to strive for a score over 700.

Accessing your credit reports is relatively easy and you’re entitled to a free credit report annually. If you have any questions about how to access your credit report, inquire with your bank. 

Obtaining personal loans on an H-1B visa

Auto and home loan credit for H-1B visa holders

CHALLENGE: Due to time restraints of your visa, you won’t be able to secure a typical home loan that lasts between 20 and 30 years. Long-term car loans may also be more difficult to obtain.

OPPORTUNITY: You could potentially secure a small home loan if you have almost the full purchase amount in cash. This, however, is an unlikely scenario for most H-1B visa holders, so you’ll probably need to rent your home during this time. On the plus side, renting your home is a great way to build your credit history.

Auto loans are easier to secure on an H-1B visa than an OPT extension of the F-1 visa. However, you still won’t have the full range of options available to American citizens or permanent residents, and the repayment terms for a car loan will need to fall within the time provided for by your visa. Also keep the following in mind:

• If you have an established credit history in the US, applying sooner gives you more time to repay your loan.

• If you’re new to the country, you may need to wait for an approved three-year extension before an auto loan provider will extend you an offer. 

Refinancing student loans on an H-1B visa

CHALLENGE: Student loans are long-term debt, which US-based lenders will be reluctant to carry, since your stay in the country has a time limitation.

OPPORTUNITY: You can not only refinance your international student loan on an H-1B visa, but you should do so sooner rather than later.

Refinancing your student loan will save several thousands of dollars off its total cost - and provide other benefits at the same time.

Refinancing allows you to take advantage of the positive changes you’ve made since accepting your student loan — namely getting your degree and securing a job and help you build your local credit profile more rapidly.

Unless you’re in a position to pay off the new loan before your H-1B visa expires, loan refinancing providers like Prodigy Finance can help. 

Refinance your international student loan with Prodigy Finance

• Get rates starting from 4% + LIBOR
• Get your commitment-free quote in 10 minutes
• Application has no impact on your credit score
• Choose the loan terms that suit your budget
• Build your credit history

Next steps for H-1B visa holders

The H-1B visa is valid for up to a maximum of 6 years.

Many internationals who got their masters in the US have also used up the OPT extension on their F-1 visa. If this is the case, then it’s time to start considering long-term options.

While there are many possibilities, you’ll first need to determine whether your goals include returning to your home country or not. If not, it’s time to start thinking about obtaining a Green Card, and depending on how long you’ve lived in the US, whether citizenship is the route you plan to take.

No matter what your decision, building your credit while on an H-1B visa will make your financial life easier while in the US.