Hotline Chronicles: Can undocumented person get a credit card?

Published: Tuesday, August 05, 2014

Get the details on what financial institutions look for in a credit card application for undocumented person.

Connie* contacted Consumer Action to ask: “Someone I know is undocumented and wants to obtain a credit card. One of the banks he tried is requesting a Social Security number (SSN). Is there any way to apply for a card without a Social Security number?”

It’s a good question, and one that can’t be answered definitively.

Financial institutions generally require a Social Security number or individual taxpayer identification number (ITIN) to open an interest-bearing checking/savings account. (The Internal Revenue Service issues ITINs to individuals who are required to file taxes but who do not have—and are not eligible to obtain—SSNs. ITINs are issued regardless of immigration status to those who have an obligation to file income taxes.) If a consumer is going to open an account that will not earn interest, such as a regular checking account—or even a general-purpose reloadable prepaid card account—the consumer still has to provide documentation that verifies his or her identity. Financial institutions may accept alternative forms of ID, including foreign passports, green cards and consular ID cards (e.g., the Mexican “matrícula consular”).

Whether a bank will issue credit (including credit cards) without a Social Security number or ITIN is up to the bank. Policies may even vary from branch to branch or region to region.

The real issue is not undocumented versus documented, or even SSN versus ITIN—it is that banks are required to “know their customers” under Section 326 of the USA PATRIOT Act. The law allows financial institutions flexibility, within certain parameters, to determine which forms of identification they will accept and under what circumstances. The rule requires that financial institutions develop a Customer Identification Program (CIP) that implements reasonable procedures to: 1) Collect identifying information about customers opening an account; 2) Verify that the customers are who they say they are; 3) Maintain records of the information used to verify their identity; and 4) Determine whether the customer appears on any list of suspected terrorists or terrorist organizations.

Technically, a foreign national should be able to use his or her country’s passport to apply for a U.S. credit card. However, as a practical matter, many undocumented people in the U.S. don’t have homeland passports, or banks are too cautious to accept such identification when issuing credit.

Some banks have experimented within the guidelines. For example, for a period starting in 2007, Los Angeles-area Bank of America branches offered credit cards to customers without a Social Security number who had managed a checking account without any overdrafts for at least three months. (The program is described in a 2008 CreditCards.com article.) Just last month, Consumer Action found an institution, Cooperativa Latino Credit Union in North Carolina, that makes credit cards, mortgages, auto loans, etc. available to consumers who can provide either an SSN or an ITIN. There are probably many more such institutions—it’s just a matter of finding them. Financial institutions probably don’t often post their policies on their websites because they may come under fire from people and organizations that are critical of allowing undocumented immigrants to participate in U.S. financial services, as was the case with the Bank of America pilot program.

Consumer Action suggests checking with local banks and credit unions in addition to branches of large nationwide banks. Another option would be to contact financial institution partners of local Bank On programs.

Institutions that accept ITINs from applicants without a credit history might offer them only secured credit cards. To obtain these cards, approved applicants will be asked to submit a security deposit (for example, $300 for an equal line of credit). By using the card wisely and paying all bills on time, applicants may be able to “graduate” to a regular card after six months to a year. (This is often the route even for applicants with SSNs and no credit history.) Other institutions may have similar policies.

*Not this consumer’s real name.

 

Tags/Keywords

credit cards, immigrants, foreigners


 
 
 

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