Can you live without credit? Yes, but honestly it’s not fun.  Even bad FICO score is better than no credit score.  When you have no credit history or score, people and businesses don’t know what to make of you.  They are unable to predict what sort of risk you are.  You end up paying A LOT more than other people, even those with poor credit.

How do I know?  Well I’m going to explain what happens when you newly immigrate to the USA.  You arrive in the US with your passport/visa, your cashier’s cheques, cash, foreign credit cards, and a job or school acceptance letter in hand.

You go to open a bank account but are told you don’t have a social security card.  So you backtrack and get a social security card.  This usually takes a few extra days.  Then you go back to the bank and get your bank account.  Finally what a relief!  Although some banks will charge you fees and not give you a free checking account because you don’t have a regular paycheck coming in yet.

Depending on where you’ve relocated to you might be renting a car or not.  If you are renting a car you can go get a driver’s license and take the test in the rented car.  This rented car by the way will be from the airport and you will have secured it using your foreign CC and probably paying the same way as well.  Foreign bank cards do not necessarily go through, especially with holds on checking accounts!

Now of course when you land typically you rent a hotel for a week while you quickly search for a place to live.  Also you have to wait until you have a SS number because everywhere you go will want it, though you have no history or score.  This will be your first challenge and experience trying to rent an apartment without credit history or score.

No place will rent to you that is an apartment complex.  Without a score, they refuse to take the risk even with a deposit.  So you look at ads for roommates, most want you on the lease, and without any history most landlords will refuse and place the risk on the roommate.  Most roommates will refuse.  So what to do?

Well many foreigners will rent a room in a house for 1 year giving them time to quickly build their credit.  During this time they live with a family willing to take a chance on them.  Standard with this rental is 3-6 months of rent deposit.  If it’s a family, typically they will rent a house and pay up to 1 year rent up front.  So most foreigners come with a lot of cash, and thus why they need a bank account asap!  Also a letter from the employer or school is required along with the rental agreement.  Really great jobs rent the house for you!  But it’s not possible for students.

Another reason you will likely have to rent a room is because getting the utilities set up in your name will require a deposit.  As a student it can be too expensive to be funding 3 months on a phone, cable, electric, etc.  For families, what choice do they have other than putting down large deposits?

Next stop car purchase.  Why a car purchase?  Even if you live in a city, many people will end up with a car.  Also this is a great way to build a credit score and history.  All immigrants even if they can pay cash for their car will finance it, even with poor interest rates because they need the credit rating.  Typically the dealerships will ask for a 50% DP or more and finance the rest of the car.  It doesn’t have to be a new car, it can be used, but it’s just to build credit.

Also because of the lack of credit history, getting car insurance, renter’s insurance will be more expensive.  The insurance companies will say they are unable to evaluate your risk and thus you may not qualify for the cheapest insurers for at least 1 year.

Finally getting a credit card.  Many of these immigrants if they come over for jobs have been financially responsible in their country.  They also have saved a lot of money to come to the US.  And if they are students, many have been saving to fund the expenditures associated with moving to a new country.  Thus most when they come have CC from their own countries.  So when they arrive and are unable to get a CC they are frustrated.

Their best best will be convincing their new bank to take a risk and give them a low limit $500 CC or getting approved for a secured credit card.  Meaning they pay cash upfront to the credit card company and then can charge up to their cash limit.  This cycle is repeated for usually 6 -12 months before they get switched over into a real credit card account.It’s a bit painful, but one way to build credit faster.  Students are a bit luckier and typically they are able to get a student credit card with a $500 limit.  People who come for jobs usually are stuck getting secured credit cards.

I guess that’s the basics of life without a credit score.  This is what people who newly immigrate go through when they arrive without a credit score or history.  Though I’ve found it’s easier to come as a student and establish credit than move as an adult worker.

Without a credit score life can be tough in the US.  This is what happened to my DH, his friends, his brother, and other relatives who came to the US.  Personally because of my excellent credit history and score, my DH got a CC earlier, we rented an apartment together, and he had a joint checking account without fees.

Is life easier with a credit score and history?  Unquestionably yes.  Can it be done without?  Yes.  But are you willing to pay a premium for everything?  Deposits on any utilities, high insurance premiums with a lesser company, and not getting the apartment or house you want because you lose out to someone with great credit.

Credit is not the end all be all, but it does make life easier.  I guess everyone who says credit history and scores aren’t important haven’t ever lived without one or moved somewhere and started with an entirely clean slate and no help.