Building Credit – New to the USA?

Building Credit:

We’re a far more global and connected world than we ever were before. Many people choose to move overseas to seek out new opportunities and experiences. But, when you move to the U.S., you will find that you arrive without a credit score.

This can sometimes be surprising. Both the UK and Canada have credit scoring systems that are very similar to ours. But, the data doesn’t transfer when you move to a new country. And, in cases of people who move from countries like India, they are moving from a place with almost no credit system to a place where it is a vital part of everyday life. Outside of arriving with a suitcase full of money, what can you do to get this important piece of the puzzle of life in America? How do I build my credit if I’m new to the United States?

The Magic Three

There are three steps that anyone who needs to build credit can take. By methodically going through the necessary actions, you can create a credit history. This gives you access to everything from credit cards to lower insurance rates to cell phone plans to the dream of home ownership.

Start with a secured credit card. This is a credit card where the credit extended to you is based on a deposit that is held in an account. So, if you deposit $1,000, you will be extended a line of credit that is equal to that. You will probably have to pay a small annual fee and any interest if you allow a balance to stay on the account.

Use it to build credit. Channel some of your regular spending through this card. Don’t overdo it; the proportion of your available credit to your credit balances is part of how your credit score is determined. At any given time, aim to use no more than 30% of the available credit. Pay off the balance every month to avoid interest charges. One of the easiest ways to handle the card is to use it for a recurring cost, such as a gym membership. Then, have the bill paid automatically each month from a connected account.

Consider a personal loan. Lenders like to see different kinds of credit used. An installment loan can show that you can be responsible when it comes to bigger debts that are paid off over time. You may need to seek a secured loan if you do not have much credit history.

It will take time to build up credit history. Pull your credit report and check your scores on a service like CreditKarma to see your progress. With careful use of your credit cards and a little patience, you will soon build up a respectable score that can give you access to many different opportunities.

Credit Tips – That Aren’t As Useful As You Thought

It seems like everyone has advice for how to improve your credit score. But it should go without saying that not all of this advice is good advice. In fact, some of the suggestions that people have are more likely to hurt than help your credit score. Needless to say, there’s a lot of misconception out there about the best ways to up your score. Here’s a look at some of those tips that you should stay away from:

Credit Tips that Aren’t as Useful as you Thought

Lower credit limits: Some people think that simply asking for a lower credit limit can help reduce debt. While that’s true, you must also keep in mind that part of your FICO score is based on how much you owe compared to your credit allotment. For a good credit score, you need to keep debt at or below 30 percent of your total allotment. But if you lower your credit limit to $3,000 and max it out, it won’t do your score any good.

Pay off installment loans: Don’t focus too much on paying off installment loans early – it can actually drop your debt load – and possibly your available credit. Instead, focus on paying off credit cards.
Open lots of credit cards: To get more of a credit allotment and increase utilization ratio, many people think that opening up several new credit cards at once is the answer. It’s not – it can actually hurt your credit score due to the multitude of inquiries for new cards.
Settling debt: It’s always a good move to settle any outstanding debt with lenders, preferably for less than you owe. However, many people make the mistake of doing so and not ensuring that a written report is filed that states the debt was “paid in full.” Make sure all debts – even if they’re paid – aren’t listed as “settled.” It can hurt your score.
Pre-paid debit cards can help build credit: They can’t – they have nothing to do with helping you build your credit score. A secured credit card, however, can. This works similar to a debit card.
Never use your credit cards: Never using your credit cards can’t hurt your credit score, right? Wrong – part of your credit score is dependent upon credit history and knowing you’re making on-time payments, so you’ve got to use them. It’s better to charge small amounts and pay it off each month than to never use your credit cards.
Credit repair firms are helpful: While this is true for some firms, it’s not true for others. That’s because while there are a lot of qualified and credible credit repair firms out there, there are arguably just as many unethical ones that may attempt to repair your credit via identity theft or some other illegal manner. Beware!

Can I Start A New Credit Report? – Key Tips

If you hit a bad shot in the game of golf, you have one of two options moving forward: you can either deal with the poor shot and strive to make a better shot on your next stroke or you can drop a new ball and essentially hit a do-over, or a mulligan. In many cases, the mulligan trumps the former option.

But unlike golf, there are no mulligans when it comes many things in life – like your credit history. Yes, those with poor credit history – and thereby a poor credit score – often wonder if there’s a way for them to hit the reset switch and essentially start over. Essentially, the closest thing to accomplishing this is bankruptcy, but this method of “starting over” can actually do more harm than good over the short term, as bankruptcy can stay on your credit report for up to 10 years. Can I Start A New Credit Report?

Here’s a look at some common misconceptions that people have when it comes to their credit history and starting over:

Name Changes

One common misconception is that you’ll get a new credit report if you were to change your name. That’s false – in this case, one’s existing credit history is simply transferred and carried over to the person’s new name. A person’s credit report is matched to a specific individual, so any data would simply be carried over in the case of a name change.

Social Security Number Change

It’s very rare that someone is issued a new social security number, legally at least. But just like as in the case with a name change, your credit history would simply be carried over to that new number, should you qualify to receive a new social security number. Unlike what many people may hypothesize, a new SSN doesn’t mean a fresh start on your credit.

Can I Start A New Credit Report?

The best option to improving your credit score, and the closest thing to hitting the reset button on your credit report, is simply to take it more seriously. Come up with a credit repair plan that will pay down high-interest debt, aim to reduce your credit card and debt to under 30 percent of your total credit allotment and always be sure to pay your bills on time. Credit repair takes patience and commitment, but it’s certainly not impossible.

On a side note, be wary of quick fix credit repair scams, which create a new credit report by altering your identity. This is illegal – an example of fraud – and can result in much more bad than good.

As you can see, there are no mulligans when it comes to your credit report. The best way to start fresh is to commit to taking the matter more seriously and work to increase your score to make you a more attractive consumer. There’s no such thing as a credit report do-over, so aim to correct your financial mistakes with smart decisions moving forward.

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Who Has Access to Your Credit Report And Why? – Advice

Who Has Access to Your Credit Report And Why? There are a wide variety of different misconceptions about your credit report that should be cleared up moving forward. Many people are under the mistaken assumption that any business can get your credit report with little to no hassle. In reality, there are only a few specific types of entities that can get this all important document thanks to the Fair Credit Reporting Act and various laws in the state where you live.

Creditors: Both Current and Future

As a general rule of thumb, any time you’re borrowing money from a business or other type of financial institution, it’s safe to assume that this entity can access your credit history under the law. Whenever you apply for a new credit card, go to your bank to take out a loan, apply for a mortgage on a house, try to buy a new car and engage in any other similar type of activity, the business that you’re working with will be able to get and view your report. This is something you can locate on your credit report under “inquiries”. All inquiries made by businesses or financial institutions are referred to as hard inquiries and in most cases will lower your credit score by a few point and stay on your credit report for a minimum of two years.

Utility Providers

While utility providers like your electricity or gas company can view your report, the law is very specific with regards to what they’re able to do with that information. Many states deny a utility provider the ability to turn down providing a person with these types of essential services, even if they have a worse than average credit history or if you’re someone in need of credit repair.

Insurance Companies

Insurance companies are another example of a type of company that can view your credit report and credit history with ease. There are a few specific rules that must be followed, however. An insurance company cannot receive a credit report that has information about your medical history unless you specifically give them permission to. Also, if you’re applying for a life insurance policy that has a value of over $150,000, the report that the insurance provider will get will have more information on it that other types of businesses wouldn’t necessarily have access to. The more negative information, such as late payments, maxed out credit cards, derogatory accounts or excessive inquiries, and as a result the lower your credit score, the more you will have to pay for insurance, whether it’s homeowners, life or auto insurance. Each state however, has different laws when it comes to insurance companies using your credit as a mean to figure out the premium you’d pay. Check your state’s laws in order to find out whether your insurance company has access to your credit, or is allowed to use it against you.

Your Employer

Finally, any type of employer that you have a relationship with can order and view your credit report at just about any time they’d like. Employers often look at a person’s credit report to learn more about them that they wouldn’t be able to find out in an interview – like how they are with money or if they’re behind on their bills. Many employers also look at a credit report as a statement of integrity to a certain extent. An existing employer can also use your credit report as a guide to help them determine if you’re the type of person who deserves a raise or a promotion, for example. Recently though, New York City council banned credit checks for most jobs, not in the financial industry, as did the following states: Nevada, California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington. The idea behind this is that the information contained in a report doesn’t necessarily say much about the persons ability to perform at work and in many cases can lead to discrimination among low-income or financially-challenged individuals.

Debt Collectors

Debt collectors are another group of individuals who can easily access your report and view it in detail should the need arise. Under the Fair Credit Reporting Act, debt collectors can use credit reports to do everything from locate a customer’s current whereabouts to look at the way these people handle their finances over time. They can use your credit report in order to locate you and try to collect money or to find out whether you are behind on your other debts as well. Either way this does not work in your favor, because most of the times, the methods that collection agencies use to collect from you are not the most consumer friendly.

For additional information on who has access to your credit report and why, as well as credit advice or a comprehensive review of your credit report, feel free to Sign Up for $0 Today.

New FICO Score – What You Need to Know

Presently, it’s estimated that there are approximately 53 million Americans who do not have credit scores or credit reports. Noting this, they also don’t qualify for credit access, making it difficult for these tens of millions of people to secure housing, utilities, a car – even something as seemingly simple as a cellular phone.

No credit history – or a lack of favorable credit history – and most are out of luck.

But according to a recent report in the Wall Street Journal, this could all be changing. The report states that FICO is close to releasing a new scoring formula that’s specifically designed to help high-risk consumers, as well as consumers without credit history or a credit report, access credit. The score has yet to be officially named, but the WSJ states that it’s already being tested by 12 credit card companies and expected to be rolled out on a widespread scale by the end of 2015. While it likely won’t open the door to new credit lines for all 53 million consumers that don’t have credit scores or credit history, it’s believed it will benefit about 15 million.

New FICO Score: The Basics

Much of this new FICO score is still a mystery, but there’s a lot that we already know about it. Here’s a look:

The big thing that this new FICO score will include are payment history of cable bills, phone bills, electric bills and gas bills. It should go without saying that these aren’t normally things that are included in a credit score. It will also factor in things like address changes, the thinking being that the more frequently a consumer changes residencies, the less trustworthy they are.
There are believed to be other factors that will be included in the new FICO score which can be learned from the LexisNexis database.
Standard FICO factors such as payment history, debt, credit history and types of credit would also still be used in this new model.
The scoring scale will still range from 300 to 800, but it’s estimated that about one-third of all newly scored consumers, under the new scoring model, would have a score over 620, which is generally considered the line where lenders either approve or deny.

However, while we know that a handful of credit card issuers are currently using the score, the verdict is still out on whether or not more of them – or all of them – will eventually adopt this new scoring model. Also, questions remain about how thorough and consistent the cable companies, gas companies and electric companies will be about reporting this data (or if they’ll report it at all). The bottom line is that the score appears to be a good idea in concept, and lenders will likely approve as it could mean more business – and more money. But there’s still a lot of details to work out before it can become as widespread as the current FICO score. Stay tuned…