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Using an Individual Taxpayer Number (ITIN) to Build Credit

December 9, 2008

What is an ITIN?

An ITIN is assigned by the Internal Revenue Service (IRS) to individuals who are not eligible for a Social Security Number (SSN) but have earned taxable income. You can apply for an ITIN when filing taxes or when opening a savings account in the United States.
ITINs are nine digit numbers, similar to the SSN, that begin with the number 9 and are generated to be used as identification for tax purposes.
An ITIN can also be used to access financial services. Some banks may take the ITIN as part of your identification when you apply for a bank loan or credit card. However, there are limitations to the use of an ITIN from a legal standpoint.
The ITIN cannot replace a Social Security Number (SSN), especially when it comes to working rights. The placement of on ITIN on work documents constitutes fraud.

Using an ITIN to Build Credit

Some financial institutions will accept an ITIN as a form of identification to apply for loans and credit cards. In so doing, you can begin to establish a credit history in the United States.

To make sure that your records get reported correctly with credit reporting agencies, it is important to understand how the agencies operate. The three largest credit bureaus, TransUnion, Experian, and Equifax, compile a person's credit history by obtaining information from their creditors such as credit card companies and financial institutions. They use personal information, such as an SSN, birth date, address, and full name to compile a credit report for each individual.

When the bureaus receive credit information about an individual with an ITIN number it is possible that they will utilize a Hand Writing ACCION USA combination of their name and address to verify their identity. Therefore, if you are building a credit history with an ITIN number, be sure to always use the same spelling and your full name each time you apply for credit.

For example: if Carlos Diaz opens a credit card with Chase and then opens a credit card with Citibank as Carlos Ramon Dias, there may be confusion. The credit agencies might create two different credit reports - one for Carlos Diaz and one for Carlos Ramon Dias. In addition, each time you change your address it is best to update it with each creditor to ensure that information from your creditors is reported correctly.

Tip: Tax season is a great time to apply for your ITIN. Many free tax preparation sites for lower income individuals will help you apply for free.