Will Bad Credit Affect my Citizenship Application?
Bad credit can have a negative impact on most areas of your life, from housing to employment and beyond. You may spend sleepless nights wondering, “Will bad credit affect my citizenship application?”
In this blog, you’ll learn how financial missteps like unpaid taxes or bad credit may affect your citizenship application and immigration status.
Does Bad Credit Affect Green Card Applications?
In the past, the U.S. Citizenship and Immigration Services (UCSIS) checked the credit scores and credit reports of immigrants when considering green card applications. The recent administration has changed these rules, but there remains the possibility that credit scores will be used to evaluate immigration requests in the future.
There’s good news and bad news.
The Good News
There’s a silver lining: having no credit score or credit report will not negatively impact your consideration for a green card. However, it can cause the process to take longer.
Since credit history doesn’t transfer between countries, you’re probably starting out with no credit history and no credit score in the United States.
The U.S. Government may look at other indicators of financial responsibility, such as records of bills consistently paid on time and in full. Be sure to keep these types of records in an easily accessible place so it will not be a hassle to provide evidence if it is requested.
The Bad News
There’s a downside: a bad credit score may negatively impact your green card application.
Recently the Department of Homeland Security (DHS) proposed rules for immigrants to the United States who want to extend their length of stay or change their status, such as becoming a permanent resident. The new rules specifically took into account a poor credit score as an indicator that an immigrant may not be self-sufficient if allowed to remain in the United States.
While this rule was recently modified by the current administration, in the existing political climate it is possible that credit scores will be used to evaluate immigration applications in the future.
The best thing you can do is begin building a credit score in the U.S. as soon as possible. Pay your bills on time, avoid borrowing more than you can repay, and avoid maxing out credit cards or using large percentages of the balance.
Wondering how to start building your credit score? Check out Upwardli’s quick-start guide for immigrants.
Does Bankruptcy Affect Immigration Sponsorship?
Technically, bankruptcy does not affect immigration sponsorship. Your sponsor can still sponsor your immigration during and after declaring bankruptcy - their bankruptcy doesn’t directly impact your immigration status.
However, your sponsor will still be responsible for supporting you. If you enter the country and receive financial assistance from government programs, you will have to pay the government back.
Hidden Dangers of Bankruptcy and Immigration
Although bankruptcy will not affect your immigration status, it can cause significant harm in other ways. It will damage your credit score considerably and continue causing problems for a very long time.
A Chapter 7 bankruptcy will remain on your credit report for 10 years, and a Chapter 13 bankruptcy will stay on your credit report for 7 years. Bankruptcy of any kind will make lenders more reluctant to let you borrow money, as it is an indicator that you failed to repay debts in the past. You face higher rates of rejection, fewer lending options, higher interest rates, and other subpar lending terms. Overall, it will make your financial life much more difficult.
Again, credit scores are taken into account when applying for a green card, visa, or citizenship, so declaring bankruptcy will also hurt your chances of approval in these processes.
Wherever possible, it is better to choose other options for taking care of outstanding debts.
Can I Apply for Citizenship if I owe Taxes?
A core tenet of the United States’ foundation is the lack of a debtor’s prison. Under most circumstances, you cannot be sent to jail simply for owing a debt.
However, there is one exception: debt due to unpaid taxes is considered a criminal offense.
Although back taxes will not cause an application for citizenship to be denied automatically, it increases the chance of rejection. However, the UCSIS can be appeased if you show that you’re taking steps to pay your taxes.
To prevent-- or at least minimize-- issues with your citizenship application, it’s best to get in touch with the IRS as soon as possible to enroll in a payment plan or take other steps to get current on your unpaid taxes.
Can You be Deported for Debt?
Fortunately, you cannot be deported for debt. But having debt can cause problems with other aspects of your ability to stay in the United States.
If you are applying for a green card, citizenship, or visa, you will need to have a credit score close to the national average. In 2020, Americans had an average score of 710. However, in the wake of the COVID-19 pandemic and the resulting rise in unemployment and evictions, the number is expected to decrease.
Build Credit with Upwardli
Upwardli understands the challenges new immigrants face when it comes to credit in America. We can help you find the partners and resources that will work with you to build and improve your credit so you can create your new life!
