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What F-1 OPT visa students need to know about building US credit

Prodigy Finance - November 26, 2018

Guide to managing credit on OPT visa

As an international student or recent graduate with an F-1 visa, you’ll eventually want to focus some attention on building and managing your credit in the US.

You may know many students that came for their studies and will leave just as quickly. However, many choose to stay in the country for professional experience or to make a new home for themselves.

And because credit is so central to American life, it is important to understand everything from how to build a good credit score, to securing credit cards, to refinancing your student loan. That’s why understanding the type of visa you hold, and how long it allows you to be in the country, will help you decide your next steps.

Here’s a full guide on everything you need to know about your F-1 visa and managing credit to set you up for credit success in the US.

What is the F-1 OPT visa?

In general, international students enter the US on an F-1 visa. This visa class enables holders to study at an accredited institution towards a specific degree and for a specific time period. However, an F-1 visa does not allow you to pursue off-campus work during your studies.

F-1 visas are given to students pursuing formal education at an accredited college or university in the US. 

What is the OPT visa extension?

The OPT is an extension of the F-1 visa. Within F-1 visa class, it’s possible to apply for an extension that permits employment, which is most commonly known as the Optional Practical Training (OPT) visa extension.

What do you get with an OPT extension?

It’s important to note that this extension grants work privileges as well as the possibility of additional time in the United States, referred to as a post-completion OPT.

But, it’s also possible to use up all your OPT time during your studies, referred to as pre-completion OPT, which may leave you with fewer visa options to remain in the US after graduation.

Although the F-1 visa doesn’t allow you to undertake off-campus work, you’re likely to find your university has several avenues through which you can gain work experience or exposure during this time in the form of internships or other non-compensated positions.

In addition, universities are often able to offer limited on-campus work opportunities as these are considered financial aid rather than employment. That said, you shouldn’t expect that you’ll secure one of these spots because not every programme offers them, and those that do often have more students than jobs to fill.

With an OPT extension on your F-1 visa, you gain the privilege of working legally in the US for up to 12 months, as long as the work relates to your programme of study.

However, if you decide to work during your studies (including many internships) it counts against your 12-month extension period. If you use the entire year before you graduate, you’ll have to consider other options if you want to remain in the US (and most of them require investment or a permanent position with an employer willing to sponsor your H1-B visa).

What you should know about an OPT visa extension

Who can apply for an OPT visa? F-1 visa holders.

What can you do with an OPT visa? You get the right to remain in the US to look for and secure paid employment in the field of study for a limited duration, as well as the right to obtain a social security number (SSN).

What can’t you do with an OPT visa? You may not undertake work outside your field.

How long does OPT visa last? Eligible students have a total of 12 months to use their OPT work authorisation; an additional 24 months is available for many (but not all) STEM degrees.

When can you apply for an OPT visa extension?

  • For pre-completion OPT: As early as 90 days before finishing your first academic year.

  • For post-completion OPT: Up to 90 days before degree completion or up to 60 days after degree completion.
  • For science, technology, engineering, and math (STEM) extensions: Up to 90 days before the initial OPT expires.

Extra OPT extension time for STEM graduates

The STEM extension enables students and graduates in specific STEM programmes to extend their OPT visa from 12 months, up to 36 months.

TIP: Just because you’re pursuing an MS degree, doesn’t mean you will automatically qualify for the STEM extension. The individual programme and degree must fit specific criteria and carry the relevant qualification. If you haven’t already checked on the STEM OPT extension status of your programme, make a plan to do so soon.

How to get your SSN with your OPT extension

Having a Social Security Number (SSN) makes living in the US easier. And if you’re following the visa track from F-1 to Green Card status, obtaining your OPT visa is the first chance you’ll have to apply for your SSN.

Social Security Numbers are used to report your earnings to the relevant government departments. In this way, it functions as a tax identification number. Having an SSN implies that you have (or have previously held) the right to work in the US, but in and of itself, it doesn’t confer the right to work. SSNs also have little to do with your current visa or future ability to remain legally in the country.

Once you have your SSN number, it will also be easier to obtain credit in the US. While this number doesn’t unlock the full range of financing open to American citizens and permanent residents, you don’t need to wait on your SSN to begin looking at your options.

Why it’s hard for OPT visa holders to build credit

When you’re working in the US on the OPT extension of your F-1 study visa, it’s critical to remember that you only have a limited period in the country. While you may be aiming for a permanent position, that’s not what your passport says officially.

Most banks and credit providers can only work with the information in your passport, which can make it difficult to secure enough credit to build your credit history in the US.

If your passport says you need to leave the country in three years, it’s going to be very difficult to find someone willing to extend an auto loan that spans five years. How will they find you after you leave the country? Will they need to deal with the hassle of liquidating that asset to recoup their funds?

But, that doesn’t mean you won’t have opportunities to build your credit while you’re working in the US on your OPT visa. In fact, this is the very best time to get started, especially if you plan to remain in the country for several years.

How to build your credit score on an OPT visa

To secure credit for purchasing big-ticket items, such as cars, houses, or further education in the future, you’re going to need to begin to build your credit score from the ground up through responsible management of bank accounts, low-risk credit cards and international student loan refinancing. 

TIP: In the US, credit (FICO) scores range from 300 to 850. The higher the number, the better your credit score. Generally, scores over 700 are considered good. Scores above 800 are considered excellent.. Because your credit score impacts your eligibility for loans as well as your interest rates on credit cards and similar products, it’s worth some effort to achieve the best score possible.

How to open a US bank account on an OPT visa

As an international student in the US, you may have already opened a local bank account to manage your funds during your studies. But if you haven’t, it is advisable to do this as soon as possible. You can use supporting documents from your university to make it easier.

In the US, you can choose between checking and savings accounts, but you’ll need to deposit money to open either type of account.

It’s also important to note that each bank has their own set of limits and regulations, so it’s worth shopping around in order to understand what is available.

To open a US bank account as an international student on an F-1 OPT visa, you’ll need:

  • Proof of identity: your passport will suffice (though you may also need a secondary form of ID)
  • Visa information: found in your passport
  • Proof of residence: rental contract or evidence of university housing
  • Enrollment letter from your university
  • Any I-20 forms you’ve received
  • Funds to deposit

If you have an established relationship with a bank and your accounts remain in good standing, you’ll have more credit card options while working on your OPT visa.

Can I refinance my student loans on an OPT visa?

You can refinance your student loan on an OPT visa. But because of the time limit attached to your visa (not your personal trustworthiness) the best options for OPT visa holders is to work with a company that specialises in refinancing international student loans like Prodigy Finance rather than a local, US bank.

There are plenty of good reasons to refinance your student loan while working on your OPT visa in the US.

The most important one is obvious: you’ll save a lot of money on the total cost of your loan when you refinance. You’ve made positive changes to your overall financial profile by completing your degree and securing employment, you’re in a great position to reduce your interest rate and negotiate more advantageous loan terms.

The best time to take advantage of international student loan refinancing is while you’re working on your OPT visa and living and working in the US. The sooner you begin, the more savings you will realise. 

Why choose Prodigy Finance to refinance your international student loan

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

Securing a US credit card on an OPT visa

First, the good news: you can absolutely get a US credit card on an OPT visa. The only downside is that you won’t have as many options as a resident.

Remember, your visa only allows you to stay in the US for one to three years. Banks only want to ensure they will not have trouble recovering funds lent to you if or when you leave the US.

Types of credit cards available to OPT visa holders:

Secured

The funds you have available are linked to funds in another account, or you pay an advance deposit from which you draw funds..

Unlike a debit card, the funds are not immediately withdrawn from the linked account. But the issuer has the ability to withdraw from there if you fail to make the minimum payments.

Unsecured

Based on your credit history and score, the issuer will provide you with a limited amount of credit.

If you haven't had time to create a strong credit profile, you should expect lower credit amounts and higher interest rates. Because the responsible use of this type of credit contributes to strong credit history in the US, this option is worth considering despite these restrictions.

A secured credit card is typically easier to get, and is just as useful for building good credit in the US as an unsecured credit card.

Many companies offer both types of credit card accounts to those working on an OPT visa. And if you’ve been renting off-campus accommodations, you likely don’t even need to leave your house to learn about these products, just look for advertisements in the mail.

What you should know before applying for a US credit card on an OPT visa:

  • The best bet to obtain an unsecured credit card is often the US bank where you have your checking or savings accounts.
  • Interest rates typically range between 13% and 25%. If you really need to accept a higher rate because you’re still building your credit history, insist on a lower credit limit amount.
  • US banks are required to disclose the Annual Percentage Rate (APR) as well as interest rates, so that you can factor in standard fees.
  • If you opt for a secured credit card, look for one that allows for you to transition the account into an unsecured product in the future. Opening new accounts can lower your credit score as can closing accounts with which you have a long history.
  • A good credit score relies on you to use your credit cards frequently, while maintaining a low balance, and avoiding late payments at all costs, which is seriously detrimental to your credit score.

Can I get credit for cars or houses on an F-1 OPT visa?

The short answer is no.

It’s possible to find a car loan if:

  • Your loan duration is less than your visa allowance (a maximum of one or three years) and you have the balance in cash.
  • You work for a large company that works exclusively with a dealership and has negotiated special financing arrangements for international employees.

Mortgages in the US usually have 15 to 30-year repayment terms. And because there is no guarantee you’ll be in the country a few years from now, banks won’t extend such long-term financing. That said, there aren’t many technicalities standing in your way if you have the cash to purchase property in the US.

Are there personal loan options for F-1 OPT visa holders?

There are a few possibilities for OPT visa holders to obtain personal loans, both secured and unsecured, though the options are few.

Your bank may be willing to offer you a short-term personal loan as long as your salary, monthly expenditures, and fledgling credit history are in order. Other local institutions aren’t likely to extend such an offer.

Additionally, new service providers aimed at providing international graduates and immigrants with fair access to financial products may be able to assist you. While there are only a handful of such providers, they may be your best bet if you need access to funds to establish yourself in the United States.

What’s the next step for F-1 OPT visa holders?

Managing your credit on an OPT visa can seem a little daunting at first, especially if you already established good credit in your home country before studying in the US.

But if you think of it as the beginning of a successful stay in the US, you’ll soon have a respectable credit score, which is the best foundation you can have when you move from an OPT extension on an F-1 to an H-1B visa.


Want to learn more about refinancing your student loan on an OPT visa?

Prodigy Finance offers no cosigner, collateral-free refinancing to eligible international graduates living and working in the United States. If you want to reduce the total cost of your student loan while building your local credit, you'll want to consider refinancing your loans with Prodigy Finance now.


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