Illegal immigrants face many challenges when trying to establish credit and access financial services in the United States. As undocumented non-citizens, they do not have Social Security numbers, which are required to apply for credit cards, auto loans, mortgages, and other types of credit. However, some illegal immigrants find ways to work around these restrictions and build their credit histories.
Using Individual Taxpayer Identification Numbers
One of the main ways illegal immigrants can get credit is by using an Individual Taxpayer Identification Number (ITIN) issued by the Internal Revenue Service. ITINs allow people without Social Security numbers to pay taxes. While ITINs do not make immigrants eligible for Social Security benefits or many other services, some banks and creditors will accept them in lieu of Social Security numbers when applying for accounts.
By using an ITIN to open a secured credit card or apply for a small personal loan, illegal immigrants can start building credit. It takes time and diligent payment history, but it is possible to build a FICO credit score without having a Social Security number. However, options are still quite limited compared to those with SSNs. Most mortgage lenders and auto financers will not approve loans for those with ITINs instead of Social Security numbers.
Using a Co-Signer with Established Credit
Another option is to have a friend or family member with lawful status co-sign for a loan or credit card. The co-signer provides their Social Security number and agrees to take legal responsibility for the debt if the illegal immigrant defaults. As long as the illegal immigrant makes on-time payments, the credit history will start appearing on both individuals’ credit reports, helping the immigrant establish credit.
Of course, this exposes the co-signer to potentially significant financial risk. If the immigrant stops making payments, the co-signer is 100% liable for the remaining balance. Candidates for co-signers should have excellent credit and low debt-to-income ratios themselves.
Using Fake or Stolen Social Security Numbers
Unfortunately, some illegal immigrants obtain and use fraudulent Social Security numbers to apply for credit. This allows them access to the same credit opportunities as U.S. citizens and lawful permanent residents. However, this is illegal and carries serious civil and criminal consequences if caught. The Social Security Administration and credit bureaus have sophisticated fraud detection systems in place to catch misuse of Social Security numbers.
Beyond legal penalties, use of a fraudulent Social Security number to obtain credit is extremely risky. Positive payment history will not help one’s credit score if the credit report is littered with errors from using a number that does not match one’s real identity. When the fraud is detected, accounts will be closed, balances accelerated, and negative information added to credit reports. So while establishing credit may seem easier initially, it often ends badly.
Obtaining Secured Credit Cards
One of the easiest ways for illegal immigrants to build legitimate credit is by getting secured credit cards. These function much like regular credit cards, but require an upfront cash deposit that acts as collateral. Typically, the deposit amount becomes the card’s initial spending limit. Charges can be made as with regular credit cards, but the cardholder must refill the deposit to continue using it if the balance reaches the limit. Payment history is reported to credit bureaus like any other card.
After demonstrating responsible use and on-time payments, many secured card issuers will graduate cardholders to unsecured credit lines and return the deposit. Capital One and Discover are among major card issuers offering secured cards accessible to ITIN holders without Social Security numbers. They provide a great option for slowly building credit from scratch.
Securing Loans from Friends, Employers, or Loan Sharks
Some illegal immigrants rely on informal personal loans within their communities to access credit without background checks or proof of legal status. Borrowing from friends, acquaintances, or employers allows gaining credit experience outside traditional institutional lenders. However, the lender risks never being repaid if the borrower defaults.
In unfortunate cases, illegal immigrants may turn to illegal predatory lenders, or “loan sharks,” for high-interest loans. These lenders often charge excessively high interest rates and use threats or violence to collect on debts. This type of lending is quite dangerous and may be run by organized crime. While used as a last resort for credit, loan sharks are never recommended.
Qualifying for DACA-Related Benefits
The Deferred Action for Childhood Arrivals (DACA) program provides protection from deportation and eligibility for work permits to certain illegal immigrants brought to America as children. DACA enrollees can apply for Social Security numbers, which allow accessing credit and financial services normally unavailable to illegal immigrants.
However, DACA is limited to immigrants meeting specific age, residency, education, and other requirements. The Trump administration also sought to phase out the program, creating uncertainty about its future availability. But for eligible applicants, DACA provides a powerful tool for accessing credit opportunities that would otherwise be very difficult to obtain.
Using Foreign Passports and Matricula Consular ID Cards
Some banks and credit providers accept Mexican Matricula Consular ID cards rather than Social Security numbers when evaluating credit applications. These photo ID cards are issued by Mexican consular offices to both legal and illegal immigrants residing in the United States. They provide identification, but no legal status. Acceptance of Matricula cards is at each lender’s discretion.
Similarly, a few institutions may grant credit if an applicant has a valid foreign passport, even without legal U.S. status. However, policies vary widely on whether passport-only verification is sufficient. Few lenders are willing to rely on foreign passports due to fraud and identification concerns. But it can provide a path to credit in limited cases.
Obtaining Credit Repair and Enhancement Services
A small credit repair industry caters specifically to illegal immigrants seeking to build credit history without Social Security numbers. These services claim to legally establish tradelines on credit reports using techniques like piggybacking authorized user accounts. However, some make exaggerated promises about the extent of credit improvement feasibly possible without legal status.
Reputable credit repair firms work within the law, but the industry is rife with scams. Some unscrupulous companies employ outright identity theft or fabrication of credit records to artificially inflate scores. Consumers should exercise caution when pursuing credit repair or enhancement services as an illegal immigrant.
Using Individual Taxpayer Identification Numbers with Major Credit Bureaus
In recent years, credit bureaus like Experian, Equifax, and Transunion have begun incorporating ITINs into credit reports. This allows illegal immigrants who have diligently built credit history under ITINs to have it added to their files. Even without Social Security numbers, the major bureaus are now accessing more data like utility bills and cell phone payments tied to ITINs.
Previously, ITIN credit history data was fractured across specialty agencies marketing specifically to immigrants. Centralization with the major bureaus makes it easier to accurately report good payment records. However, it also connects undocumented status more clearly to credit files, creating data security concerns. Overall, the shifts are making ITIN credit building easier and more portable.
Conclusion
Illegal immigrants face severely limited credit and lending options due to lacking legal status. But various avenues exist to incrementally build credit without Social Security numbers. Getting secured cards, becoming authorized users, or taking out personal loans with ITINs allow establishing traditional credit records. Unfortunately, some resort to fraudulent Social Security numbers or loan sharks with disastrous results.
For eligible childhood arrivals, DACA status opens doors to wider credit opportunities. And increasing acceptance of foreign IDs like Mexican Matricula cards may ease credit access slightly. But most traditional mortgages, auto loans, and top-tier credit cards remain out of reach for undocumented immigrants. Building credit while staying legal and financially safe involves patience and diligence.