An H-1B visa is a nonimmigrant work visa that allows U.S. companies to hire foreign workers and gives those employees the temporary legal right to live in the United States for a specified period of time. Because H-1B visa holders are new to the country, it can be difficult to get approved for unsecured personal loans because they usually do not have an established credit history. However, there are a few ways for visa holders to obtain a personal loan either through lenders that specialize in this area or with the assistance of a co-signer.
Moving to a foreign country for a new job can be an exciting and daunting experience. Unfortunately, it also comes with a lot of expenses. You’ll need to rent an apartment or find a roommate to split the cost. Depending on your living situation and your job, you’ll probably also need to buy some furniture and maybe even purchase a car or some new clothes to go with your new job.
You may not have a lot of cash on hand after relocating, so a personal loan may be just the thing to get you started. However, because your H-1B visa only gives temporary status, it can be difficult to achieve loan approval, but not impossible. Read on to find out how to get approved for a loan and other financing options available to H-1B visa holders.
What is an H-1B visa?
According to the U.S. Citizenship and Immigration Services (USCIS), the H-1B visa is a nonimmigrant classification that applies to people who wish to perform services in a specialty occupation. This includes fields such as science, technology, engineering, and math. To qualify for the visa, you typically need at least a bachelor’s degree or equivalent.
In addition to these fields, the visa may also be available to employees working on projects relating to a Department of Defense (DOD) cooperative research and development project, or services as a fashion model of distinguished merit or ability.
H-1B visa limits
H-1B visas are usually good for a period of up to three years but they can be extended up to six years. Usually at that point, if the individual wants to remain in this country, they must apply for a green card (which is officially known as a permanent resident card) or apply for full U.S. citizenship.
The H-1B classification has an annual limit (cap) of 65,000 new statuses or visas each fiscal year. However, certain applicants are exempt from this cap. An extra 20,000 petitions, for example, may be filed on behalf of beneficiaries with a master’s degree or higher from a U.S. institution of higher learning. This exemption also applies to H-1B workers who work at an institution of higher learning or its affiliated or related nonprofit entities, a nonprofit research organization, or a government research organization.
Before applying for a H-1B visa, be sure to review the new electronic registration process and 2022 updates to H-1B visas.
Why it’s difficult for H-1B visa holders to get a personal loan
When lenders in the U.S. assess applicants’ creditworthiness, they typically look first at the applicants’ credit reports. The lender must confirm that the applicant has both a good credit score and a solid credit history before approving a personal loan.
Thus, the problem for foreign workers is that they probably have little to no U.S. credit history. Lenders also look at employment and income, but really the most important piece of the equation is your credit history. Unfortunately, most traditional banks, credit unions, and other financial institutions will not lend money to people with no credit scores.
Additionally, it can be hard for foreign workers to get a personal loan because few lenders are willing to loan money to non-permanent residents who could theoretically leave the country at any time. If an H-1B visa holder were to default on the loan and then move back to their home country, there would be virtually no way for a lender to recover that money. This means visa holders are by default perceived as higher risk.
Other considerations for personal loans
The reality is that even if you are approved for a personal loan, you probably won’t get the most favorable repayment terms or interest rates as an H-1B visa holder. Permanent residents (green card holders) or U.S. citizens will typically get lower interest rates, higher borrowing limits, and longer loan terms from banks or credit unions.
As a non-permanent resident with only temporary status, you’re seen as a higher risk to lenders. This results in lower borrowing limits, higher interest rates, and less time to repay the loan. Most lenders do not want the loan term to extend beyond the expiration date of the H-1B visa, so if it’s a three-year visa, your loan term probably won’t be for longer than that.
Steps to apply for personal loans for H-1B visa holders
Many lenders who cater to workers from other countries can be found online, which can simplify the application process. First, be sure to research multiple lenders and find out the best possible interest rates and terms.
Next, follow the steps below to apply for online personal loan lenders.
- Fill out the online application.
- Upload copies of verification documents.
- Wait for approval.
- If approved, read the contract carefully and sign the promissory note, if applicable.
- Funds will usually be transferred to the account within one to five business days.
- Set up a repayment schedule — consider setting up autopay from your bank account so you never miss a payment.
Fortunately, you don’t have to go far to start comparing personal loan lenders. Use the tool below to compare lenders that consider borrowers with an H-B1 visa. Specify the loan amount, preferred interest rate, and loan term you’re interested in.
Documents needed to apply
At a minimum, to obtain a personal loan, visa holders will likely need to have a valid visa that extends through the life of the loan. Other eligibility requirements will also typically include a verifiable U.S. bank account and a United States home address. Here is a list of documents that will likely be needed to process a loan application.
- A valid visa
- Proof of identity (like a valid driver’s license or passport)
- Proof of U.S. address. This can be verified with a utility bill, credit card statement, or other mail sent to the individual’s address.
- Income verification (pay stubs or a letter from your employer)
- Bank statement to prove the visa holder has a U.S. bank account.
You may also need to provide details of any outstanding loans (like international student loans) or other financial commitments, such as monthly payments for rent.
Other personal loan options
If you find you can’t get approved for a personal loan as an H-1B visa holder, there are a couple of other things you can do to improve your chances.
Get a co-signer
Getting a friend or family member with a strong credit score to cosign a loan will significantly help your chances of getting your loan application approved. This is also an excellent opportunity to build credit. Even though there is a co-signer on the loan, that account will appear on your credit report. As long as it remains in good standing, you are on your way to establishing good credit scores.
If you don’t have any family in the States, or friends capable of helping out, another option is to ask your employer if they will cosign a personal loan for you. After all, the company that hired you believed in you enough to sponsor your visa and bring you to this country to add value to their company. This might mean they are also willing to lend financial assistance and help you get approved for a loan as well.
In a lot of cases, getting a credit card can be easier than getting a personal loan because of less stringent credit requirements. You could easily use a card to pay for expenses associated with your move. However, keep in mind you will probably be looking at even higher interest rates than with personal loans.
If you do obtain a credit card, be wary of getting a cash advance on the card (such as for a major purchase), as the interest rates will be even higher than with normal usage. You are better off using your revolving line of credit for purchases and paying off the balance as quickly as possible.
If you’re a new resident in the U.S., you may want to consider applying to a credit card company that doesn’t require an applicant’s credit history. You can start searching through some possibilities below.
Building credit history for visa holders
First of all, you should obtain a copy of your free credit report, if you have one. If you were a student in the United States, perhaps you had a student loan or credit card which would have been reported to the major credit bureaus. These items would help your score, assuming you handled the accounts responsibly. If you don’t have any credit history, however, there are a few ways to build your score.
Secured credit card
While you still have to apply and be approved, getting a secured line of credit is a great way to boost your score and much easier to get than either traditional (unsecured) credit cards or personal loans.
You will need to pay a deposit to use the card, which may also be your credit limit — highly likely if you have no credit in this country. But, if you don’t go over your limit and always make your monthly payments on time, your credit score will go up, expanding your options for future lines of credit. This is especially important if you plan to stay in the U.S. long-term.
You can use the comparison tool below to start searching for a secured credit card that best suits your spending habits.
Rent and utilities
Many people faithfully pay their rent and utilities on time every month but never see this responsible behavior reflected in their credit score. That’s because these things are not automatically reported to credit agencies like other accounts.
However, you can request that creditors report your on-time payments to the credit reporting agencies. This is another great way to showcase your responsible credit use and boost your score.
Can H-1B visa holders get a car loan?
In some cases, it may be easier for visa holders to get auto loans rather than personal loans because car loans are secured. Since the vehicle is used for collateral for the loan, if monthly payments aren’t made, the car can be repossessed and the lender can recoup their losses.
However, keep in mind there will most likely be a down payment required to obtain the car loan. You will also need to prove sufficient income to make payments on the loan.
Can H-1B visa holders get a payday loan?
Almost anyone can get a payday loan, but they’re usually a terrible idea. The interest rates are the highest you’re pretty much ever going to see, and you have very little time to pay them back.
Payday loans are also not usually for significant amounts of money, so this option might not be very useful anyway. Bottom line: Try not to use these types of personal loans unless it’s an absolute emergency.
- H-1B visa holders are nonimmigrant foreign employees sponsored by American companies to temporarily live and work in the U.S.
- It can be difficult for H-1B visa holders to get approved for personal loans due to a lack of established credit history in the United States.
- Getting a friend, family member, or your company to cosign your loan will vastly improve your chances for loan approval and help you build credit.
- At a minimum, you will need a U.S. bank account and address to get personal loan approval.
- Obtaining a secured credit card is one way for visa holders to begin building a solid credit score.
View Article Sources
- H-1B Specialty Occupations, DOD Cooperative Research and Development Project Workers, and Fashion Models — U.S. Citizenship and Immigration Services
- The H-1B Visa Program — American Immigration Council
- Immigration Help – What Are The Legal Costs of Immigrating to the U.S.? (And How to Pay For Them) — SuperMoney
- Best Personal Loans for Immigrants, Non-U.S. Citizens | June 2022 — SuperMoney
- PenFed Credit Union Personal Loans — SuperMoney
- Upgrade Personal Loans — SuperMoney
- SoFi Personal Loans — SuperMoney