30 Days, 30 Hacks: Mastering Your US Master's Journey

As an international student pursuing Master’s in the United States, you embark on an expensive yet memorable journey. One crucial aspect of this experience is navigating the intricacies of the American financial system, which is not an easy system to understand or work in efficiently. A fundamental component of that is establishing a credit history.

Securing a credit card and crafting a long and responsible credit history can be a strategic move with far-reaching advantages. A credit history is more than a mere financial record here in the United States; it's a passport to financial independence, opening doors to rental leases which is important for securing a lease on the house when you move for internships and/or jobs, car loans, and even certain job opportunities. This journey begins with the responsible use of a credit card, which allows students to build a credit profile and cultivate a positive credit score. Trust me when I say this, it is difficult to take that step into a comfortable living and the “American Dream” that we all hope to achieve, without having a credit card in your wallet or your “Apple Wallet” 😕.

Beyond financial autonomy, a well-maintained credit history can lead to lucrative rewards and benefits, such as cash-back incentives and travel perks, transforming everyday expenses into valuable opportunities for savings. But we as international students need to focus on how to take advantage of the credit history because we have a disadvantage of not being in this system since we are 18 years old, baring of course if you completed your undergraduate degree here in the US.

This introductory exploration underscores the significance of establishing credit as an international student, highlighting how it can serve as a foundation for future financial goals and a safety net for unexpected emergencies. As we delve deeper into this topic, I will unravel the intricacies of building and managing credit, empowering international students to make informed financial decisions and thrive in their American academic endeavors.

Establishing a Credit Profile: 

In the U.S., many financial transactions, such as renting an apartment, buying a car, or even applying for certain jobs, may require a credit check. Without a credit history, it can be challenging to access these opportunities. By getting a credit card and using it responsibly, international students can start building a credit profile.

There are certain banks that offer credit cards to international students without any credit history, you’ll usually find information about these SPECIFIC credit cards at your International Student Service Centre’s brochure/notice board. If not, “Discover” is one such company that does this scheme, feel free to reach out and learn more or get a referral 😛 .

Building Credit Score: 

A good credit history contributes to a positive credit score, which is essential for accessing favorable financial products and services in the future. These may include better interest rates on loans, higher credit limits, and premium credit card offers. A strong credit score can save you money in the long run.

I am a firm believer of using the money that you have in your account and nothing more, because debt can be a terrible scenario while in an alien country on a restricted study/work permit. It is important to make prudent decisions when trying to navigate this tricky system. Always PREFER to use not more than 30% of your total credit card limit (summation of credit limit for different cards you have). This protects you from making big purchases when the resources to pay back are small. Always pay your credit card bills on time because these credit cards tend to have a huge interest rate and harsh repercussions on your credit history if you tend to miss more than one payment.

Emergency Fund: 

Credit cards can serve as a financial safety net in emergencies. If you encounter unexpected expenses or need to return home for an emergency, having a credit card can provide a means to cover these costs temporarily.

Emergencies often require quick access to funds, and a credit card offers precisely that. This can be especially crucial when you're far from home and don't have local financial resources readily available. Without a credit card, you as an international students may find yourself in a difficult position if you need to borrow money in an emergency. You might be forced to take out high-interest loans, which can lead to long-term financial burdens, NEVER TAKE DEBT WHICH YOU KNOW YOU CAN’T PAY IN THE NEXT 3-5 years. With a credit card, you can handle unexpected expenses without resorting to such costly options.

Interestingly, using your credit card responsibly during emergencies also contributes to building your credit history. Paying off emergency expenses on time demonstrates financial responsibility and can positively impact your credit score, which in turn can benefit you in the long term when seeking loans for house/car or financial opportunities.

Rewards and Benefits: 

Many credit cards offer rewards programs, such as cash-back or travel miles, that can provide financial incentives for using the card responsibly. Some cards also offer additional perks like extended warranties, rental car insurance, and purchase protection.

As much as I hate to use money that is not mine, the perks do have an appealing sound to it, please make sure to explore all these BEFORE you apply for a credit card.

A few questions that you should consider answering before applying for a new credit card:

1. What is your net-worth at the moment? Because you will be asked this question in the credit card application, and best way to answer this is to say that you have access to $12000 annually, it essentially makes the application process easier. Only use this for the first credit card, subsequent credit cards should have True Positive value of your net-worth (fixed part of your income).

2. What is your credit score at the time of applying? Never apply for a new credit card, if you have a score of less than 720. This is crucial because each credit card you apply for does a hard-check on your credit profile and each hard-check takes away points from your profile and you end up with higher interest loans/insurance payments.

3. How many credit cards do you have already? It is in the best interest of the international students on F-1 visa specifically, to not have more than 3-4 credit cards as this leads to more hard-checks, less trust from banks and less score.

4. Does the credit card have an annual fee? Most credit cards that are utilized for having a higher credit limit, and have more perks, have an annual fees, anything more than a $100 for the first couple of years is not in the best interest and should be avoided. Never fall prey to pre-approved credit card mails in your mailbox, you’ll end up loosing a lot of points, and money through higher payments, in the long run.

5. Is the credit limit being offered to me, more than my last credit card? Always apply for a higher credit limit than your last credit card, this makes your net-worth graph look linear and having a high total credit limit helps in having more points.

6. How do I check my credit score without impacting my credit score? This is a riddle in itself, but Credit Karma by Intuit is the best software I’ve come across, to check. Please be sure to not fall prey to their advertisements, can be misleading or miscommunication at times. Always read through the entire “Terms and Conditions”, however hard it may seem. Also no this post is not sponsored by them. 🫠 

To make the most of a credit card while building credit in the U.S., it's important to use it responsibly. Pay your bills on time, keep your credit utilization low (i.e. don't max out your credit limit), and avoid carrying high balances or accumulating excessive debt. Responsible credit card use can help international students not only establish a positive credit history but also develop good financial habits that will benefit them throughout their lives.