If you recently moved to the United States, whether for studies, work, or family, you’ll encounter plenty of joys but also, as is normal, the rough patches that come with relocating.
One of the biggest concerns for people moving to the United States is figuring out how to establish a credit history. Without solid credit, securing housing, a car, credit cards, or loans can become more difficult.
But don’t worry! Here are 3 ways to build good credit if you’ve recently relocated to the U.S. and you don’t yet have a credit history:
· Apply for a secured credit card
· Establish a relationship with a U.S. bank
· Pay on time, manage your spending, and be patient
Apply for a secured credit card
One way to start generating credit in the United States is to use a credit card to demonstrate your financial reliability. Consider applying for a secured credit card to help build your U.S. credit score. These cards require you to make a cash deposit into your bank or credit union account. Your spending limit is typically equal to the amount you’ve deposited.
Important: make sure the issuers of your secured card report your payment history to at least one of the three primary U.S. credit bureaus—Equifax, Experian, or TransUnion. If this information isn’t disclosed on their websites, you can reach out to their customer service teams to clarify. It’s crucial that your payment history is reported; otherwise the secured card won’t help you build a credit score in the U.S.
Establish a banking relationship through a checking or savings account
Opening a checking or savings account with a bank can help you start building your credit history in the U.S., making it easier to obtain a credit card or loan from that financial institution in the future. As you establish a solid relationship with the bank from the start, you begin to signal your financial stability.
Important: after opening a checking account, be careful not to overdraw it, as that can negatively affect your credit report in the U.S.
Pay on time, monitor your spending, and be patient
You will officially start building credit in the U.S. as soon as you have a credit product (credit card, student loan, mortgage, etc.) that is reported to the major credit bureaus.
Make your payments on time to demonstrate your solvency and establish a solid credit history. Rental reports can also affect your score, so make sure your monthly rent payments are made on time; this will be essential for building a good record.
Another important factor in your credit score is your credit card utilization: a good rule of thumb is not to use more than 10% of your limit. You should also try to use the card at least once a month to demonstrate that you can responsibly use that credit over time.
Also be sure to check the due date on your payments so you don’t miss a bill. Many providers will allow you to set up automatic recurring payments from your checking account to ensure you don’t fall behind.
After a few months of on-time payments, you’ll be connected to the U.S. credit system, which will make it easier to get approved for other credit products or to purchase a new car.
