How to build a Credit History
by Kai Blum
Anyone who wants to live in the United States temporarily or permanently should become familiar with the subject of Credit History in advance.
If one wants to procure a loan in order to purchase a car or a house, then this subject is unavoidable. Additionally, many landlords and even potential employers consult the credit history to assess the trustworthiness of the applicant.
An issue for immigrants to the USA …
There is a huge problem for new arrivals to the USA: Without loans, one cannot establish a reasonable credit history, and without a credit history no one gets loans. References from abroad cannot be claimed.
How to solve this problem best:
One can ask the bank, where one opens a checking account (in Europe current account), to issue a Secured Credit Card as soon as possible. Initially, this has a low credit line that one has to secure by depositing an equal amount of money.
Thus, the bank takes no risk and the customer has a credit card that he/she can use in everyday life and to start building a credit history.
Aberration: Debit card with Visa or MasterCard logo
The debit card that one obtains automatically with the account also has a Visa or MasterCard logo and can also be used as a credit card, however, it does not affect the credit history, because it is directly linked to the account, and the money is deducted immediately from this when paying.
Debit Card is not suitable to build a Credit History
Tip 1: Pay bills always on time!
It goes without saying that credit card bills should always be paid on time. The same applies to paying all other bills (electricity, gas, water, internet), because delays are reported by the respective suppliers to one or all of the three Credit Bureaus (Equifax, Experian, TransUnion) and have a negative impact on the credit history and the credit score.
The credit score is a three digit number that is calculated from the credit history and provides a quick credit check for potential lenders.
Credit Score consists of a three-digit number
Tip 2: Apply for several credit cards
After using the Secured Credit Card for a while, one should get two or three additional credit cards. The offers for them usually arrive by mail.
Initially, the interest will be high and the credit line low, but that can not be avoided. Try to use the credit cards every now and then.
Possible preparation: American Express Card
Some immigrants have had good experiences in obtaining an American Express Card already in Germany in order to re-register at American Express after moving to the USA and to get a card issued there.
However, one should only do this after receiving the Social Security Number, as this is used by the Credit Bureaus to keep track of the credit history of each individual.
Tip 3: Access to the Credit History
On www.annualcreditreport.com one can retrieve one’s credit history as a credit report at all three companies for free once a year. More often will be subject to charge. You should definitely make use of it to verify the collected data on its accuracy and, if necessary, file an objection.
About the Author
Kai Blum has been living for twenty years in the USA, has written several books, including Alltag in Amerika (Everyday life in America) and maintains the website Auswandern USA (Immigrating to the USA), where people who want to immigrate can find lots of information.
⇒ more information about Kai Blum in German.
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