US bank account and US credit: how to become financially visible in America

A US bank account is quickly explained. What comes next is harder: in America, your credit history decides whether you get an apartment, a car, a credit card and a line of credit, and it starts at zero there, no matter how solid your standing is at home. This guide covers both halves, the account and your credit, for you and for your US company, and takes you deeper into every topic.

1Two things that belong together in America

Look at the USA from Europe and the first thing you think of is a bank account. That's right, but it's only half the story. An account keeps your money safe. In America, though, something else decides how the financial system treats you: your credit history. It shows landlords, car dealers, card issuers and banks how reliably you have paid in the USA. Without one, you're not a bad risk to the system. You're invisible.

That sets the thread for this guide. First come the account and the numbers you need for it. Then comes credit: how a credit score is built, why your credit at home doesn't travel with you and how your first card starts your history. Finally there's your US company, which gets its own credit file, separate from your personal one.

We call this your second financial identity: an account, an address, a number and a credit history in America, built before you need them. Still living in Europe and want to know how to open an account without an SSN or a US residence? We walk you through it step by step in our article Opening a US bank account as a non-resident without an SSN. Here we look at the full picture.

2What a US bank needs to know about you

Every bank in the USA must have a written program for identifying its customers. The federal rule is set out in 31 CFR 1020.220 and is called the Customer Identification Program. It sets the minimum a bank must collect before opening an account: your name, your date of birth, your address and an identification number.

For the identification number, the rule distinguishes between US persons and everyone else. From a US citizen, the bank requires a taxpayer identification number, usually the Social Security Number. From a non-US person, any one of these is enough: a US taxpayer identification number, a passport number with the country of issuance, an alien identification card number, or the number of another government-issued photo ID that shows nationality or residence. So your European passport is, in principle, an acceptable basis.

If you have applied for a taxpayer identification number but not yet received it, a bank may still open the account if its program allows for it. It must then confirm that the application was filed and obtain the number within a reasonable period.

The second part of the rule matters most: the bank must verify your information, using documents such as your passport or other methods, for example checks against credit bureaus and databases, or references from other banks. How it does this is up to its own risk assessment. That is exactly why experiences differ so much in practice: the rule sets a minimum, and each bank sets its own bar above it. The rule gives no one a right to an account.

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3SSN, ITIN, EIN: three numbers, three jobs

The USA has no population register and no national ID card for everyone. Numbers fill that role, and newcomers mix them up easily. The table below puts them side by side.

The Social Security Number is the number of the social security system. Non-citizens generally only get one if the Department of Homeland Security authorizes them to work in the USA. Without work authorization, it is only issued for another valid reason, for example when a federal law requires it for a benefit. If you come on an immigrant visa, you can apply for it with your visa application, and in most cases the card arrives by mail.

The ITIN is the IRS's individual tax number for people who need a US tax number but can't get an SSN. It has nine digits and serves only federal tax purposes. It doesn't grant work authorization or immigration status, and it isn't valid as ID outside the tax system. Even so, it's one of the most important building blocks for banking, cards and credit history, because many applications ask for a tax number. If it isn't used on a federal tax return for three consecutive tax years, it expires on December 31 after the third year.

The usual route to an ITIN is through your first US tax return. With ITIN Express, we apply for your ITIN through a special procedure developed together with the attorneys on the firm's team, with no prior tax return. The IRS quotes nine to eleven weeks of processing for applications from abroad, and the decision to issue rests with the IRS alone.

Finally, the EIN is your company's tax number. The IRS issues it free of charge. You can only apply online if your company's principal place of business is in the USA and its responsible party has an SSN or ITIN; everyone else applies by phone, fax or mail.

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4Address and phone number: where the bank reaches you

For many Europeans, the address is the biggest hurdle. The federal rule requires an individual to give a residential or business street address. If you don't have one, you may give an Army or Fleet Post Office box number or the street address of a next of kin or another contact person. The rule does not list a PO box for individuals. For a company, it requires the principal place of business, a local office or another physical location.

Banks often set the bar higher. Mercury, for example, accepts a residential address as a business address, but not a Registered Agent address, a PO box or a parcel service address. Branch banks are similar in practice: a real residential address, where your debit card, PIN and statements can also be delivered, opens doors that a mailbox address keeps shut.

No federal rule makes a phone number mandatory. It still matters: the methods a bank may use to verify your identity without documents explicitly include contacting you. Many banks and card issuers send verification codes by text, and a US number saves you a lot of hassle there.

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5Branch bank, online bank, fintech: where your money really sits

There are three kinds of providers for a US account. The big branch bank with locations across the country. The online bank with its own banking license but no branches. And the fintech, a technology company that offers accounts but isn't a bank itself and works with partner banks.

The difference shows in deposit insurance. The FDIC insures deposits at insured banks up to $250,000 per depositor, per bank, per ownership category. An individual account and a joint account at the same bank are insured separately. And important for you as a European: according to the FDIC, you don't have to be a US citizen or a US resident for your deposits to be insured.

A fintech itself is never FDIC-insured, the FDIC says. Your money is only protected once the fintech has deposited it at an insured bank and the records show who owns which amount. This is called pass-through insurance. It does not cover the failure of the fintech itself. Mercury describes itself exactly this way on its own site: as a fintech, not a bank, with banking services through two partner banks and up to five million dollars in FDIC coverage through their sweep networks.

For your strategy, that means: a fintech is often the fastest route to a business account, especially from abroad. A branch bank is often where a personal banking relationship grows, one that counts later for cards and loans. For many people, it pays to have both.

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6Moving money between your home currency and dollars

Once the account is open, the question is how your money gets there. To transfer from Europe, you need your US account's bank details, and in the end two things decide the cost: the exchange rate the sending side charges you and the fees on both ends. A standard international transfer from your bank at home and a specialist payment provider often differ noticeably. Before any larger transfer, work out the amount that will actually land in your US account.

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7How your credit score is calculated

Your credit score is a three-digit number calculated from your credit file at a credit bureau. The three nationwide bureaus are Equifax, Experian and TransUnion. The best-known formula comes from FICO, and the base FICO score runs from 300 to 850. According to myFICO, a score of 670 or higher counts as good, and 740 or higher as very good.

The table shows how the number comes together. Payment history carries the most weight at 35 percent, followed by amounts owed at 30 percent. Behind that second factor is utilization: if you use a large share of your credit limit, you look overextended, even if you pay everything back every month. Length of credit history counts for 15 percent, and new credit and credit mix for 10 percent each.

For newcomers, one rule matters most. You only get a FICO score once your file contains at least one account that has been open for six months or longer, and at least one account reported in the last six months. So your clock starts ticking with your first reported account, and no shortcut replaces that time.

You can check your file itself for free: each of the three bureaus gives you a free report once a week, but only through AnnualCreditReport.com. How the score plays out in everyday life, and the mistakes newcomers make, is covered in US credit score for immigrants.

8Why your credit rating from home doesn't travel with you

Many Europeans are surprised: twenty years of bills paid on time, a home of their own, a spotless record with their national credit bureau, and none of it counts in America. The reason is legal. Some credit bureaus operate in many countries, but their data generally may not cross borders. Experian itself points to differing national laws, some of which prohibit the transfer, and to US credit reporting rules that a foreign data furnisher could hardly meet.

Your history isn't completely lost, though. Some services work with credit bureaus in other countries and translate your foreign file into a profile US lenders can use; some card issuers take such profiles into account when you apply. And some internationally active issuers may draw on the account history you built with them in another country when you apply in the US. Neither replaces a US credit history, but both can make your first step easier. Whether either is an option for you depends on your country and the issuer.

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9Your first card: how your credit history begins

A bank account alone doesn't build credit history. Debit cards, cash and prepaid cards are generally not reported to the nationwide credit bureaus, according to the Consumer Financial Protection Bureau (CFPB). What gets reported is credit: credit cards, installment loans, auto loans.

The classic way in is a secured credit card. You put down a deposit as collateral (the CFPB uses $500 as an example) and get a credit limit of about that size. Once you pay your statement, the full limit is available again. The CFPB also mentions the credit builder loan, a small loan from your bank or credit union that is paid out to you at the end of the term, and cards with low limits. A third option is becoming an authorized user on someone else's card: according to myFICO, the card activity then usually shows up in both cardholders' files, for better or worse.

Two rules shape how an issuer decides on your application. Before issuing a card, it must check whether you can afford the minimum payments from your income or assets. And it may consider your immigration status, but not your national origin. That's why no one can promise you approval; the issuer decides on every application.

Good news for anyone without an SSN: Experian matches reported accounts not only by SSN but by all the identifying details the lender submits. An account you opened with your ITIN can therefore appear in your file. How this works in practice is explained in US credit card as a non-resident without an SSN.

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10Your US company's bank account

If you form a company in the US, it needs its own account. Companies are subject to the same identification rule as individuals, plus a second one: the bank must identify the beneficial owners. Under 31 CFR 1010.230, these are all individuals who directly or indirectly own 25 percent or more of the company, plus one person with significant management responsibility, such as the managing member or the CEO. The bank verifies their identity just as it would for a personal customer.

On top of that come the formation documents and the EIN. Mercury, for example, asks for the official formation documents, the IRS EIN letter and a government-issued ID for every person with operational control and every owner of 25 percent or more. If the EIN hasn't been issued yet, Mercury accepts the application with a completed Form SS-4 and gives you 90 days to submit the EIN letter. Mercury decides on every account opening after its own review.

How we set up your company's banking is explained in Account opening and banking for your US company.

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11The business credit card

Legally, a business credit card is a different thing from your personal card. The consumer protection rules of the Truth in Lending Act, implemented in Regulation Z, generally don't apply to credit used primarily for business purposes. The issuer has more leeway, so read the agreement more carefully.

For a new company, many issuers check the owners' personal credit history, because the company doesn't have one yet. The SBA puts it this way for loans in general: with a new business, creditworthiness typically depends on the owner's personal credit score. A personal guarantee, making you liable for the company's debts, is often added. There are exceptions. Mercury says it issues its IO card without a personal guarantee and without checking your personal credit history; the limit and access are based on your company's balances with Mercury.

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12Business credit: your company's credit file

Your company gets its own credit file, separate from your personal one. It is kept by business credit bureaus; the SBA names Dun & Bradstreet, Experian and Equifax. The usual first step is a D-U-N-S Number from Dun & Bradstreet, a nine-digit business identifier. It's free, and according to Dun & Bradstreet, issuance takes up to 30 business days.

The file fills up with payments reported by suppliers, lenders and card issuers. The best-known score it produces is the Dun & Bradstreet Paydex, a scale from 1 to 100 on which 80 stands for paying on time within agreed terms. Mercury says it reports IO card payments to Experian, Equifax and Dun & Bradstreet.

How credit lines are granted to companies is explained in A credit line for your US company.

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13After the move: the first few weeks

If you move to the US yourself, a lot changes. With a visa that authorizes you to work, you are entitled to a Social Security Number. If you arrive on an immigrant visa and already applied for the SSN with your visa application, the card will in most cases be mailed to the address you gave. Otherwise, the Social Security Administration recommends waiting ten days after arrival before applying, because it can then verify your immigration documents online more easily. The application is free.

If you had an ITIN before, use only the SSN from then on and let the IRS know. It will then merge your tax records under the SSN and retire the ITIN. Give the new number to your banks and card issuers too.

The first few weeks bring the situations in which your credit history may be checked: the lease, the phone contract, the car loan. Landlords are allowed to pull consumer reports for this. If you started a US credit history before the move, you'll be in a much stronger position in those weeks.

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14The order to do things in

All of this adds up to the order we recommend. First the number, because it takes the longest: the ITIN for you, the EIN for your company. Then an address where mail is actually delivered. Then the account: for you, usually at a big bank with an in-person appointment; for your company, often at a fintech first. Next, your first card that reports to all three bureaus, paid on time with low utilization. Only once your personal history carries weight should you move on to business cards and your company's business credit.

Start this path early, and you'll later have something money can't buy in America: time in your own credit file. Whether you move in a few months, in a few years, or just want America as your Plan B, the clock starts with your first reported account. For people without a US company, that's our US Bank Account Opening; for entrepreneurs with a company, it's Credit Builder. The bank decides on every account and the issuer on every card; we put the groundwork in place and guide you through it.

In short

• A US bank needs your name, date of birth, address and an identification number. As a foreigner, that can be a tax ID or your passport number with the issuing country; the bank decides whether to open the account.
• SSN, ITIN and EIN each have their own job: work and Social Security, your personal taxes, your company's taxes.
• Deposits at an FDIC-insured bank are protected up to $250,000 per depositor, per bank, per ownership category, and that includes foreigners. A fintech itself is never FDIC-insured.
• Your credit rating from home does not travel with you. Your US credit history starts with the first account reported to the three nationwide credit bureaus.
• Your US company has its own credit file. It starts with an EIN, a D-U-N-S number and payments reported to the business credit bureaus.

Frequently asked questions

Can I open a US bank account as a European without living in the USA?

US law does not rule it out. A bank must collect your name, date of birth, address and an identification number; for foreigners, that can be a taxpayer ID or a passport number with the country of issuance. Which other documents it asks for, and whether it opens the account at all, is up to each bank and its own risk program. We cover the route without an SSN and without a US address in detail in Opening a US bank account as a non-resident without an SSN.

Do I need a Social Security Number for a US bank account?

Not necessarily. For foreigners, the federal rule lists a passport number with the country of issuance as an identification number alongside a taxpayer ID. The Social Security Administration itself says you generally do not have to give a bank an SSN if you do not have one. In practice, though, an ITIN or SSN is still a key building block for a credit history.

Does my credit record from home count in the USA?

No. A credit bureau's data stays in the country where it is held. Your US credit history starts with the first account reported to the bureaus in the USA.

How quickly will I get a credit score?

For a FICO score, your file needs at least one account that has been open for six months or longer and at least one account reported to the bureau within the last six months. So you generally will not have a score before roughly six months. How high it is then depends mostly on paying on time and keeping your utilization low.

Is my money at a US bank protected even as a foreigner?

Yes, as long as it is an FDIC-insured bank. According to the FDIC, you do not need to be a US citizen or a US resident. The limit is $250,000 per depositor, per bank, per ownership category. With a fintech, the protection only applies once the money sits at an insured partner bank and further conditions are met.

Does my US company need its own credit?

Yes, if it is going to use credit cards, trade credit or a line of credit. Business credit bureaus keep separate files for companies. With a new company, though, lenders usually look at the owners' personal credit history at first, so both halves belong together.

How we help you

• US Bank Account OpeningYour own access to the American financial system, even without an SSN.
• Credit BuilderCredit for your company and for you, built step by step.
• ITIN ExpressYour ITIN through our special procedure, no tax return needed.
• ConsultationOne hour with the firm: your case, your questions, a clear answer.