You came to the U.S. to explore exciting new opportunities, but guess what: your previous stellar professional, academic, and financial history didn’t travel with you. When it comes to financial credibility, you’re starting from zero.
Good news: This blank slate doesn’t have to get in the way of the great things you came to do. It doesn’t even have to slow you down. You can build the credit you deserve, fast, even if you’re new to the U.S.
Your credit score: Why it matters
In the U.S., your credit score is a measure of your financial credibility and general trustworthiness. It’s a quick snapshot that tells people and companies whether it would be smart to do business with you. A good credit score opens the door to easily renting an apartment, buying a car, or opening a mobile phone account. A poor or nonexistent credit history, on the other hand, makes it harder to take these basic steps to enjoying your new life in the U.S.
A good credit score will also save you tons of money over time. You are more likely to be approved for a personal loan, you qualify for lower interest rates on loans, and you can avoid paying interest when you carry a credit card balance.
In short, if you are new to the U.S., you want to build a great credit score as quickly as possible. Fortunately, this may be easier than you think. Avoid these credit-busting mistakes, make a few smart, credit-building moves, and you’ll be on your way to an exceptional credit score in no time.
DON’T make these credit-busting mistakes
- DON’T dodge the credit issue. Starting a new life in the U.S. is enough to keep anyone busy, but that’s no excuse to delay dealing with your credit. Make sure you start building good credit from day one. Apply for a CreditStacks Mastercard before you even leave your home country. Your new credit card will be waiting for you when you arrive in the U.S., and you can start building your credit immediately, with every card transaction.
- DON’T apply for many credit cards at once, then max them out. Just because you receive multiple credit card offers in the mail doesn’t mean it’s a smart move to apply for all of them! Even one declined application can hurt your credit, so be strategic about the applications you make. Open new accounts sparingly, then be thoughtful about using your available credit. Never borrow more than you can afford.
- DON’T pay your bills late. Late payments will cost you in terms of higher interest rates, less favorable terms, and more fees. Worse, they will drag down your credit score. If you are prone to forgetfulness, set up automatic payments from your bank account to your credit card.
DO consider these credit-building moves
- DO use lines of credit such as credit-builder loans or secured credit cards to demonstrate your creditworthiness.
A credit-builder loan is like a forced savings plan that builds credit. The lender releases the loan amount to you, minus interest, after you have paid off the loan. A secured credit card requires a cash deposit to guarantee that you will not default on your bills. Either of these can help you build credit as long as you make payments on time. Whenever you make payments against a credit-builder loan or a secured credit card, your payments are reported to the credit bureaus, potentially boosting your credit score.
- DO keep your credit utilization rate below 30%. Just because you have more credit available doesn’t mean you should use it all. To keep your credit score high, aim to use less than 30% of your credit limit, whatever that may be, at any given time. This doesn’t mean you need to spend less. Just make sure you pay off your credit card balance whenever you reach 30% utilization rate. For example, if you have a $5,000 credit limit, make a payment every time you reach $1,500 in charges. At the end of the month, remember to pay off your entire balance to avoid interest charges on your card.
- DO apply for a credit card of your own. When you apply for a CreditStacks Mastercard, your application will be processed even if you do not yet have a Social Security Number or credit history. Unlike a secured card, CreditStacks does not require a deposit. CreditStacks also offers significantly higher spending limits and helps you build your credit score with tools to automate paying off your balance every month and keep your utilization rate consistently under 30%. The best part: you can apply even before you move to the US, so you can start building your credit from day one.
Tackling the credit issue up front, thoughtfully, will give you the peace of mind of knowing you are strengthening your financial future even as you navigate your new life in the U.S.