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Credit Card Lender Measures Potential, Not Risk, of International Students


Since leaving Beijing to attend a university in the United States, Jack Guo has learned to navigate a new language, different methods of getting around town, and even a new way of managing his money by obtaining a U.S. credit card.

“A lot of my friends have the cards already because it’s pretty important to get around L.A. (Los Angeles),” Gao said. “And also, if you’re going to stay here afterwards for a job, for internship, for career, of course, you are going to consider buying property to live here, and having credit is pretty important if you want to get a loan.”

More than 1 million international students are studying in the United States. Many of them find it helpful to have a smartphone and a credit card. Unlike many cash-based societies, credit cards are widely used in the U.S., especially with the advent of e-commerce. With a mobile application, users with a credit card can buy things and order food or a car ride.

Antiquated system

Obtaining a credit card, however, is not easy for international students. Traditional U.S. lenders often require an applicant’s Social Security number and a record of their credit history, which most international students don’t have.

“The traditional system was designed in the 20th century before the internet, before smartphones, before social media and is kind of antiquated. We are inventing a new system,” said Kalpesh Kapadia, a former international student from India.

Kapadia is the co-founder and chief executive officer of a Silicon Valley-based lender called SelfScore. It measures the potential of the student, and not just the risk, through an unconventional way of determining an applicant’s creditworthiness.

“Everyone has a smartphone. Everyone has a social media presence, so what we look at is that these people have been through many filters in society,” he told VOA.

Kapadia says SelfScore looks at documents such as passports and visas. There is also the academic criteria, such as an applicant’s acceptance to a school, and potential ability to pay. Kapadia says fewer than 1 percent of SelfScore’s 10,000 credit card holders are delinquent on payments.

“This is a highly motivated population,” he added. “Someone who comes here 10,000 miles (16,000 kilometers) away to make their life better through education is going to behave quite differently.”

Small percentage pay late

The 15-20 percent who do not pay the monthly balance in full are charged about 19 percent in interest fees. Making payments in full and on time can help card holders obtain larger loans in the future in the U.S., like those needed for a car or a home.

“One of the benefits I hope to get is to build credit, which is very important in terms of whether you want to get a loan from a bank,” Guo said as he considers his options after getting his university degree.

So far, students from more than 66 countries and attending 400 colleges in the U.S. have a SelfScore credit card.

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