Building credit in the United States is important to access loans, credit cards, and other financial services. Starting to build credit in the United States and maintaining a good credit history is a task that requires perseverance and several steps.
Here we tell you what you can do to build credit in the United States and how to monitor and understand credit scores.
How to build credit in the United States?
Building credit in the United States is a process that requires patience and perseverance. Regardless of whether you have an active credit life in your home country when you arrive in the United States, banks do not take that information into account. This is because data confidentiality and consumer protection laws make it illegal in some countries to disclose credit information to lenders outside their borders. The same is true if you are established in the United States and want to move to another country. Here are some tips to start building credit in the United States:
- Get a Social Security Number (SSN): If you are a permanent resident or have a work permit in the United States, you will need an SSN to build credit in the United States. This number is essential to establish your credit history.
- Open a Bank Account: This does not affect your credit history directly, but having a bank account is important for financial management and establishing relationships with financial institutions when building credit in the United States.
- Get a secured credit card: If you’re new to the United States and don’t have a credit history, you probably won’t qualify for a regular credit card. In this case, a secured credit card may be an option. With a secured card, you make a security deposit that usually determines your credit limit. By using it responsibly, you can start building credit history and building credit in the United States.
- Apply for a beginner credit card: Some financial institutions offer credit cards designed specifically for people who are building their credit history. These cards typically have lower credit limits and higher interest rates, but they can be an option for starting to build credit in the United States.
- Make payments on time: Once you have a credit card, it is crucial to make payments on time. Timely payments demonstrate responsibility and play an important role in building your credit history.
- Use credit responsibly: Avoid spending more than you can afford. Keep your balance low relative to your credit limit. This is known as your “debt-to-income ratio” and can impact your credit score.
- Don’t open too many accounts at once: Opening multiple credit accounts in a short period can indicate risk to lenders and negatively affect your credit history.
- Monitor your credit history: Use free services like AnnualCreditReport.com to review your credit report annually to make sure there are no errors or fraudulent activity. This is vitally important for building credit in the United States.
- Diversify your credit type: Over time, consider diversifying your credit history. This could include different types of credit, such as car loans, student loans, or personal loans.
- Be patient: Building credit in the United States takes time. Patience and consistency in responsible credit management are key to a good credit history.
How to monitor and understand credit scores?
A credit score in the United States refers to a numerical rating that indicates a person’s creditworthiness. This score is used by lenders, financial institutions, and other creditors to assess the risk of granting credit to an individual. Here we share a credit score table so you can better understand the score ranges and we also show you different ways you can view your credit score.
Credit Score Table in the United States
Credit scores in the United States are typically calculated based on information contained in credit reports from the three major credit bureaus: Equifax, Experian, and TransUnion. These reports include details about payment history, amount of debt, length of credit history, types of accounts, and other relevant factors.
The most common credit scores in the United States are FICO (Fair Isaac Corporation) scores, which range from 300 to 850. A high credit score, usually above 700, indicates strong creditworthiness, which increases the chances of being approved for credit and loans with favorable terms. Below you will find the credit score table used in the United States.
Factors that influence credit score
It’s important to regularly monitor your credit score and review your credit reports to ensure they are accurate and reflect your true financial situation. A good credit score can offer financial advantages, such as lower interest rates and greater chances of approval for loans and credit.
To calculate the credit score, the following are taken into account:
- Payment history: whether payments have been made on time in the past.
- Credit Utilization: The ratio of your current balance to your credit limit.
- Credit History: The length of your credit history.
- Types of credit: The variety of credit accounts (cards, loans, mortgages, etc.).
- Outstanding Debt: The total amount of outstanding debts.
- New Credit Applications: How many times you have applied for new credit recently?
Can I get a copy of my credit report?
Yes, and you are entitled to one free report every 12 months from the major consumer credit reporting companies: Equifax, Experian, and TransUnion. You can request a copy at AnnualCreditReport.com.
How do I get my free credit report?
To obtain a copy of your credit report, you can do so through the following options:
- Online: Visit AnnualCreditReport.com (Please note that the site is in English).
- By phone: calling (877) 322-8228
- By mail: Download and complete the Annual Credit Report Request form. You will then need to mail the form to:
Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
Please note that you can request all three reports together or one at a time. If you request them separately, you can monitor your credit report throughout the year. Once you receive your free annual report, you can also request additional reports. By law, a credit reporting company can charge up to $12.50 for a credit report.
You can also receive free reports from consumer reporting companies.
Please note that you will need to request reports individually from each of these companies. Several of the companies on this list may provide a free report every 12 months while other companies charge a fee for the service.
Conditions to be taken into account to request an additional free report:
- You received a notice denying you credit, insurance, or employment, or you experienced an “adverse action” resulting from a credit report. To get this free report, you must request it within 60 days after receiving the notice. Other “adverse action” notices you may receive include notices of an unfavorable change in the terms or amount of your credit or insurance coverage, or unfavorable changes to your employment terms or a license or other type of government benefit.
- You believe your file is inaccurate due to fraud.
- You have requested a credit report from a national credit reporting company in connection with placing an initial fraud alert (in which case you may request two free copies of an extended fraud alert).
- You are unemployed and want to apply for a job within 60 days from the date of your application.
- You are a beneficiary of public social assistance (welfare).
- Your state laws require the provision of a free credit report.
Be careful and pay special attention to websites that claim to offer free credit reports. Some of these websites offer a free report only if you purchase other products or services. Others give you a free report but bill you for services that you must later cancel.
Remember that building a strong credit history is a gradual process. Start with small steps, like a secured card, and over time you’ll be able to access broader credit options and lower interest rates.To obtain a free, legally authorized credit report, visit: AnnualCreditReport.com or call (877) 322-8228.
