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

Building Credit – New to the USA?

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.

Common Myths About Credit – Education

As credit scoring bureaus have become more open about what makes up your credit score, people have become more educated about maintaining good credit. However, there are still many myths that abound that can damage your score and get in the way of home purchase dreams. Don’t believe any of these dangerous myths:

Myth: You can buy a new credit identity.

Some fraudulent credit repair companies say that they can get you a brand news credit identity free from part credit mistakes. What you actually get when you deal with these companies is an Employer ID Number. It has nine digits, just like a Social Security Number, but it has a distinct purpose. Trying to use it instead of you SSN is fraud and can result in criminal charges.

Myth: You should close old accounts that you aren’t using.

Many people believe that old credit accounts can hurt their credit score because creditors fear that, with too much credit, you’ll get in over your head. Those old accounts, however, look good to potential new creditors. They show that you can be trusted with large amounts of credit without going on a spending binge. To make sure that old accounts stay open, make sure you make an occasional charge on the account. One of the best ways to do this is to put one of your monthly automatic withdrawals, such as a health club membership, on the card and sign up to have the bill automatically paid.

Myth: Reducing Your Limits Can Help Your Score

Like the old account myth above, this is an action that can actually hurt your credit. Potential creditors want to see low utilization of credit, as it signifies that you can be trusted.

Myth: You should always keep a balance on your cards.

The truth is, credit reporting companies have no way to know whether you are keeping a balance on your cards. Your credit card debt is reported once a month, usually when your statement goes out. Whether you pay in full each month or leave a bit unpaid won’t be noticed. Plus, credit scoring bureaus tend to give higher scores to those who use only a small portion of their available credit. Don’t carry a balance if you don’t have to and save yourself unnecessary interest payments.

Myth: Looking at your own credit score counts against you.

When you look at your own score, this is known as a soft pull. Credit reporting agencies are only concerned about hard pulls; that is, ones that indicate you are shopping for more credit. In reality, you should look at you scores from all three agencies at least once a year to ensure that everything is accurate. Make sure that you request the information directly from the three credit reporting bureaus. If you buy your score from a third party, this can appear to be a hard pull.

Being educated about what helps and what hurts your credit score can make you a more savvy consumer and open up new opportunities. As you work to improve your credit and accomplish dreams of owning a home, learn all you can and apply it to your financial health.

Secured Credit Cards – Resources

One of the most important factors that drives credit score improvement is ACTIVE, POSITIVE trade-lines. When someone has a score below 680 credit card companies are not as wiling to lend as they used to be. Because of this we are constantly advising our clients to look into secured credit cards. These credit card companies are much more likely to approve someone because they are able to take a security deposit from the borrower to over look the lack of credit score. Quite a few offers can be found directly on our site under the KeyCreditCards tab. If you would like some additional information regarding our Secured Credit Cards program. Feel free to visit us online at

For additional information on how to repair your credit, please contact our office at 617-265-7900 or request a free consultation below.