The full guide to managing your credit on an OPT visa
Prodigy Finance - November 26, 2018
Any international student or recent graduate in the US is going to be concerned with their credit.
You may know a few students that came for their studies and will leave just as quickly. However, many choose to stay in the country for professional experience – or, when it works out, permanently.
Because credit is so central to American life, you’ll be looking at everything from how to build a good credit score to securing credit cards and refinancing your student loan during this time.What’s achievable, however, ties in with the visa you hold – and how long it allows you to be in the country.
Here’s a full guide on everything you need to know about your visa, and managing credit to set you up for success in your new home country.
What is the OPT visa?
International students usually (but not always) 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. It doesn’t allow you to pursue off-campus work during your studies.
The OPT is an extension of the F-1 visa
Within this visa class, it’s possible to apply for an extension that permits employment – this is most commonly known as the Optional Practical Training (OPT) visa extension.
What do you get on the OPT extension?
It’s important to note that this extension grants work privileges – and it may confer additional time in the United States (post-completion OPT).
But, it’s also possible to use up all your OPT time during your studies (pre-completion OPT), leaving 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 that your university has several avenues through which you can gain work experience or exposure during this time – but you shouldn’t expect compensation for your efforts.
In addition, universities are often able to offer limited on-campus work opportunities as they’re considered financial aid rather than employment. That said, you shouldn’t expect that you’ll secure one of these spots; not every programme offers them and those that do often have fewer on offer than students desiring one.
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 your work relates to your programme of study.
However, if you decide to work during your studies (including many internships), you’re cutting into that 12-month 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).
The OPT extension basics
Which visa classes may apply: 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; the right to obtain a social security number (SSN).
What can’t you do with an OPT visa: undertake work outside your field.
How long is the OPT valid: 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 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 STEM extension: up to 90 days before the initial OPT expires.
Extra time for STEM graduates
You’ve probably heard of the STEM extension for the OPT extension. (It’s true, nothing in immigration is ever as straightforward as the simple letters and numbers they use to denote visa classes.)
This extension enables students and graduates in specific STEM programmes to extend their OPT from 12 months to 36 months.
TIP: Just because you’re pursuing an MS degree, doesn’t mean you qualify for the STEM extensions. 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, you might want to take a moment to do so now.
Getting your SSN with your OPT extension
As you’ve probably learned, having a Social Security Number (SSN) makes everything easier in the United States. 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 be easier to obtain credit in the US. But, you should note that this number doesn’t unlock the full range of financing open to American citizens and permanent residents. And, you don’t need to wait on your SSN to begin looking at your options.
The credit challenge OPT visa holders face
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 the official paper in your passport says.
Most banks and credit providers can only work with the information in your passport, making it difficult to secure enough credit to build your credit 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 credit score on OPT visa
To secure credit for big-ticket items in the US (think cars, houses, education) in the future, you’re going to need to build your credit score from the ground up – usually through responsible management of bank accounts and low-risk credit cards.
TIP: In the US, credit (FICO) scores range from 300 to 850 – and the higher the number, the better your credit score is. Typically speaking, anything over 700 is considered good, and excellent is anything over 800. As your credit score impacts your eligibility for loans as well as your interest rates on credit cards and similar products, it’s worth it to strive for the best possible score you can achieve.
Can I refinance my student loan on an OPT visa
Yes, you can refinance your student loan on an OPT visa. But, you will need to look at international student loan providers like Prodigy Finance rather than local banks. But, it boils down to the time limit attached to your visa – not your personal trustworthiness.
And, there are plenty of good reasons to refinance your student loan will working on your OPT visa in the US.
The most important driver 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 profile when you completed your degree and secured employment. Now you’re in a position to reduce your interest rate and negotiate loan terms that are more beneficial to yourself.
If you can, it’s best to take advantage of loan refinancing while you’re working on your OPT visa. In this case, sooner means more savings and you’re probably in a position to make an even more serious dent in your total loan cost while working in the US.
Quick view: Prodigy Finance: refinance benefits
- Get rates starting from 4% + LIBOR
- Get your 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
Opening 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. It’s advisable to do this sooner rather than later as 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 account.
And, it’s important to note that each bank has their own set of limits and regulations; with so many products out there, it’s worth shopping around.
To open a US bank account as a student on an F-1 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.
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. But, the not-so-good news is that you won’t have as many options.
Remember, your visa says you’re allowed to stay in the US for one to three years, and banks want to ensure they’ll recover their money when you leave.
The first thing you should know is that there are two different types of credit cards:
Secured
The funds you have available are linked to funds in another account or you'll pay a deposit.
Unlike a debit card, you’re not directly using that money when you spend with a secured credit card, but the issuer has the ability to withdraw from the linked account if you fail to make the minimum payments due.
Unsecured
You’ll be given a credit limit based on your credit history and score.
If you haven't had time to create a strong credit profile, you should expect lower credit amounts and higher interest rates.
But, as this is the credit you'd like to build, you may still want to consider this option.
As you can imagine, a secured credit card is typically easier to get – and is just as good for building your credit in the US as an unsecured credit card.
There’s a seemingly endless list of companies prepared to offer both types of credit cards to a range of individuals – even those working on an OPT visa. And, if you’ve been renting off-campus accommodation, you’ll have noticed that you don’t even need to leave your house to learn about these products; you’ll have plenty of information just through advertisements in the post.
There are a few things you should know before applying for a US credit card on an OPT visa:
- The best bet for an unsecured credit card is usually your 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 balance amount).
- US banks are required to disclose 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 (albeit temporarily) while maintaining accounts reflects positively on your credit.
- A good credit score relies on you: use your credit cards frequently, while maintaining a low balance, and avoid late payments at all costs as this is seriously detrimental to your credit score.
Can I get credit for cars or houses on an OPT visa?
The short answer here is no.
You might find a car loan if:
- Your loan duration is less than your visa allowance (so 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.
Of course, a local co-signer will make all the difference if you want to go this route, though you may want to investigate a second-hand car you can purchase with cash first.
Mortgages in the US usually come with a 20 or 30-year repayment duration. As there’s no guarantee you’ll be in the country in just a few years, banks won’t extend home loan 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 OPT visa holders?
There are a few possibilities for OPT visa holders to secure personal loans (both secured and unsecured), though the options are few and far between.
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 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 a fresh start and 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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