Every credit card swipe is a small loan. But what if you were taught to never go into debt? For immigrants, America’s reliance on credit scores often means an uneasy and strangely complicated journey.
LEILA FADEL, presenter.
Every time you swipe your credit card, you’re technically taking out a small loan from your bank. Now, what if you were taught to never go into debt? For newcomers to this country, America’s debt culture is often a Catch-22. NPR’s Thirza Christopher and Alina Selyukh share their story.
TIRZA CHRISTOPHER, BYLINE. So I’m in the application. They ask for my personal information, my first and last…
Alina Selyukh, BYLINE: Shall we tell you what we’re doing, Tirzah?
CHRISTOPHER: I’m applying for my first credit card. And Alina, you are my support group.
Seljukh: As an immigrant friend who is honestly still kind of weird paying for groceries with a microcredit from my credit card, for example.
CHRISTOPHER: Okay. present. OK, I click.
SELYUKH: What if you are confirmed on the spot?
CHRISTOPHER: It says thank you for your request. Unfortunately, we were unable to approve your application. We will provide more detailed information explaining our decision by US mail within seven to 10 days.
SELYUKH: You were just rejected right away.
CHRISTOPHER: Oh, no.
Adina Appelbaum. Yeah, I see that all the time.
CHRISTOPHER: Adina Appelbaum is a financial advisor and attorney who works with immigrants.
APPELBAUM: Many people face similar problems.
CHRISTOPHER: Well, at least I’m not the only one, Alina.
SELYUKH: I didn’t want to scare you, but the same thing happened to me 10 years ago. I had a debit card, regular payments, and my bank denied my credit card application because I had no credit history in the US
CHRISTOPHER: And I’m not even sure I really want a credit card, which Appelbaum says is also common.
APPELBAUM: It’s such a cultural shift because in many countries they don’t have this culture of debt and things are paid for in cash and it can actually be a shame to have debt or a credit card, whereas here it can be quite difficult. go a lifetime without a credit card.
CHRISTOPHER: So America is kind of running on credit.
SELYUKH: Not just credit cards, but mortgages, car loans, student loans. In total, US household debt is $17 trillion.
CHRISTOPHER: And I looked at this. by comparison, the European Union has more households but less than half that amount of debt. Or compared to India, where I was born, the US has only a quarter of the population, but nearly 40 times the debt.
SELYUKH: The US economy is counting on you to borrow money. It’s the main thing that feeds your credit score.
BARBARA KIVIAT. This new design of being financially responsible is to borrow and pay back.
CHRISTOPHER: Barbara Kiviat is an economic sociologist at Stanford.
KIVIAT: But another way to be truly financially responsible is to simply not take on debt in the first place.
SELYUKH: This was a big culture shock for me. In a way, being on top of my debt is now better than no debt at all, because my credit score is shorthand for how financially sound people think I am.
CHRISTOPHER: That’s really scary. Well, because for me growing up, we were always warned. the only thing you don’t do is borrow money. And it’s not even money, just in general. If you borrow something, you always return it immediately. So I came to the US and it’s like, I have my debit card, I have my money, and you know, I don’t need a loan. This is my first time in DC, I work full time and I need to get an apartment and everyone is turning me down. And I’m like…
CHRISTOPHER: …What did I do? And then it was either a denial or they said, you have to pay, like, three months’ rent, you know, $3,000.
SELYUKH: But it is, and the reason is that they were doing it…
CHRISTOPHER: I have no credit history.
SELYUCH: That’s Yazmin Lopez from Wisconsin, who also had trouble renting without a good credit score. She grew up in Mexico, moved to the U.S. as a teenager, and remembers finding a personal finance book by Suze Orman at Goodwill one day.
LOPEZ: He was talking about how you can have a credit card when you’re in college and how your parents can sign you up. But I was like, my parents don’t have a credit card, so it won’t work. Like my father, he has all his money under his mattress.
CHRISTOPHER: Honestly, under the mattress seems like a safe place.
SELYUCH: Like me, he assumed you had to have a Social Security number to apply for a credit card, but you can actually apply with a tax ID. Long story short, after many years, Yazmin Lopez is finally the parent she’s been reading about. He builds credit histories for his children. They are 8 and 14, both on his credit card.
LOPEZ: I’m glad I can teach my kids that, hey, you can learn how to play the game (laughter).
CHRISTOPHER: Okay. This is my second rejection letter. It says that unfortunately we could not confirm your request due to:
SELYUKH: So no credit history, and they don’t want to be the first to take a risk on you.
CHRISTOPHER: Honestly, all I can do is rent an apartment or buy a car one day. But I learned that everyone checks your credit score now: landlords, car dealerships, even some employers.
SELYUKH: And the surprising thing is that all this is quite new. Modern credit cards are only about 50 years old, and it’s only been in the last 20 years that people have been able to learn their own credit scores. Now the bill has become such a focus that credit card debt can seem like it serves a higher purpose.
CHRISTOPHER: Kiviat also talked about salaries. They stagnated for decades, even though prices continued to rise, and so credit cards became an easy way to afford things between payments.
SELYUKH: And there is a big ideological background: America as a country of individual responsibility. So instead of large government subsidies or social benefits, we have personal loans.
CHRISTOPHER: And for people with no credit history, some banks are starting to come after them with new types of credit cards.
(Paper crunching sound)
CHRISTOPHER: I’m going to open it. Oh my God: Credit card. Oh my God: OK.
SELYUKH: You finally qualified.
CHRISTOPHER: I did. I finally applied for this card called a secured credit card. Basically I had to deposit $200 of my own money.
I owe it to myself.
But if I pay my bills on time within seven months, I’m done with the regular credit card.
SELYUKH: I think we should go build you a credit history.
(SOUNDBITE OF ELECTRONIC VOICE)
AUTOMATED VOICE. Your total is seven…
CHRISTOPHER: Oh, my God! Yes! It worked (laughter).
SELYUKH: You were so surprised.
CHRISTOPHER: My first credit purchase…
CHRISTOPHER: My first thought is that I have to go back to the office and pay for it.
CHRISTOPHER: That’s my first payment. I don’t want to be in debt (laughs).
SELYUKH: The whole question is this.
CHRISTOPHER: I’m Tirzah Christopher with my new credit line.
SELYUKH: And I’m Alina Selyukh, NPR News.
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