Building a credit score in the US.

Ruu_Old

Since I had troubles when moving to America and establishing myself heres a few pointers for you all. Credit is very important, you wont get a mortage or a loan without something on your report.

1. Open up a checking and savings account and keep at least $100 in both accounts, lenders will see that you are at least putting money away for the future.

2. You wont get a credit card unless you have something on your report therefor you have to apply for a special type of credit card. This card is called the "secure credit card", probably offered by your local bank. It works where you deposit an amount (normally $500 min.) and it acts as your spending limit. This money is used by the bank should you fail to make payments but it gains interest and if you close the account, you get the money back. Its basically a security deposit for them.
Every month, make at least the minimum payment and the company will report to the credit companies that you have a good payment history. After a few months you will notice that card companies will start coming to you offering their cards. Dont get carried away!

3. Consider taking out a small loan from your local bank and pay it back over time but make sure to ask the bank of this loan will be reported to the credit bureaus otherwise it will be for nothing and not much use to you.

4. Pay your electrics, rent, etc on time. Alot of the things I mentioned wont go on your credit report. HOWEVER, it will go on your credit report if you fail to pay on time, so keep paying on time.

This was a post I made on the boards us forum 3 years ago roughly. Right now my credit is in the high 700's (850 is the best you can get!) Good luck.

GuanYin

Great thread Ruu!

I'd add that you should aim to have no more than 30-40 % of your credit limits used at any billing cycle. Maxing out your credit is viewed negatively.

Also, only apply for credit when you need it. You'll be scored negatively for every credit check (which will be carried out when you look for credit). A good rule of thumb is that you shouldn't open any more than 3 new lines of credit in your first year and no more than 1 a year after that.

Store Credit Cards like Target, Macys, JCPenny etc are easier to get than VISA or MC and they report to credit agencies.

Finally, you're entitled to one free credit report a year, from all three credit reporting agencies. https://www.annualcreditreport.com/cra/index.jsp is the site to go to.

iMax

Ruu wrote: »

2. You wont get a credit card unless you have something on your report therefor you have to apply for a special type of credit card. This card is called the "secure credit card", probably offered by your local bank. It works where you deposit an amount (normally $500 min.) and it acts as your spending limit.

This money is used by the bank should you fail to make payments but it gains interest and if you close the account, you get the money back. Its basically a security deposit for them.

Every month, make at least the minimum payment and the company will report to the credit companies that you have a good payment history.

This is the way everybody's first credit card should run

Overheal

I was just looking into this last week as my credit score is still non-existant. There are a few cards out there specifically tailored to building credit like the one Ruu above describes - some will not have fees on them, but your first one will. Bank of America's starter card has an annual fee of $40 but you'd only need to hold it for a year anyway before you established a modest history/score. Their website is very good on it and you can chat with an online rep if you have any questions.

thenobody

Hey

Would having a history with Mastercard in Ireland have any standings to getting credit scores or credit cards in the states?
Have had a Bank of Ireland Mastercard for over 13 years and have paid it off fully every month.
Got my greencard this week so am planning to move to the states as soon as I can or as soon as I can get a job sorted.
Any advice would be much appreciated

Ruu_Old

Nope, I was the same. I had an excellent credit history in Ireland but the ratings or history does not transfer over. Counts for zip. Best of luck with the move though.

thenobody

Ah thats crap. Thanks

How about - if I was to open an American Express credit card here (which i believe can be transferred to another country) to start my credit history now and transfer it whenever i move to the states later this year?
Does this sound like a good idea and that it would help?

MyPerfectCousin

thenobody wrote: »

Ah thats crap. Thanks

How about - if I was to open an American Express credit card here (which i believe can be transferred to another country) to start my credit history now and transfer it whenever i move to the states later this year?
Does this sound like a good idea and that it would help?

It might help. But you could probably keep your Irish Mastercard going for a year or so (using a friend or family member's address in Ireland) while building up your US credit history. Shops will accept it over there. Paying the bills might be a slight hassle, but at least you'd have a credit card.

thenobody

Thanks.
Ill get a secured credit card to start. Seems easy. Just the different terms makes it all daunting but it isnt really. Always been fine with money and dealing with it so putting $500 into the credit card and then paying the bills on time is no problem. After six months should hopefully have enough credit score built up for a normal card.

dave2pvd

thenobody wrote: »

How about - if I was to open an American Express credit card here (which i believe can be transferred to another country) to start my credit history now and transfer it whenever i move to the states later this year?
Does this sound like a good idea and that it would help?

Won't work. Has to be US-issued to build US credit.

davork

dave2pvd wrote: »

Won't work. Has to be US-issued to build US credit.

back in 1996 when I was sent to the US by the company I worked for, I asked American Express if they could set me up

They said yes and my US credit reports subsequently showed my credit history as having started when the non-US Amex account was opened

I guess you could always ask MBNA (as they exist in both Ireland and the US) if they could help if you have one of their cards

As for getting a bank account opened, I was living in the UK at the time and my UK bank had a US subsidiary which they smoothed the way with.

AIB have a couple of branches in NYC plus M&T so they might be able to do something for you

Taylor H

Hi,

By far the easiest and best way to build your credit score is to avoid late payments. By paying bills on time, you show lenders that you are reliable and consistent.

If you have had a credit card for a long time and rarely use it, think twice before closing the account. If you have a solid history of on-time payments, it may be in your best interest to keep the account open. It will show lenders that you have a longer credit history.

lil_lisa

Do doctor's bills and the such apply here too?

Black Swan

lil_lisa wrote: »

Do doctor's bills... apply here too?

Only in the negative if you don't pay them and they take the initiative to either report you to one of the big three, or use a collection agency which does? Then again, if you use a credit card to pay your doctors bills, and keep your card balances paid, you could build positive credit that way?

lil_lisa

Crap, I'm gonna have baaad credit!

silja

Been living here for 13 months and just got my first unsoliciated credt card in the mail. I feel so proud :P

lil_lisa

Finally got a credit card too. Capital One mailed me, they currently have an offer for people with short credit histories. I.e. travellers and the like. If anyone needs one, they're still doing it! No annual fees. My current bank refused me a credit card because I haven't had a bank account open long enough (about 10 months now). So this is great!

Plus they have the same offer TSB brought out a while back, you can put any picture on your card free of charge!

thenobody

Damn Capital One. I keep getting three letters a week from the bastards telling me to open up a credit card with them!! I hate junk mail. Time Warner Cable are just as bad and I already have TV and internet from them.

10 months! Mine only needed three.

lil_lisa

Yeah I have about 5 letters so far from them. The worst is that Time Cable send us junk mail but then when we request their services they're like "No, sorry, we actually don't service your area". Then stop sending me junk mail! Ugh!

Anyway, what bank are you with? I don't want to use this credit card, I want it just to build up my score and it's a bit of security over here. Just in case Bank of Ireland lend money to Greece and go bankrupt! :eek:

thenobody

With Citibank.

Everyone and everything in America is out to scam you. Have to be careful not to be gullible.

Remember as I said. Let the card generate a bill keep the bill amount no more than 20% of the credit limit and pay it off after the bill date and it will build nicely.

lil_lisa

Yes, I think the best way to use a credit card, if its just for building up credit and not as a temporary loan (which is usually a bad idea), is to only ever use it if you're going to pay it off 100% very shortly afterwards. I never do it any other way.

spideog7

I have a few bank accounts one of which has been opened for 2 years and has had a positive balance. I have an electricity bill in my name (always paid on time albeit normally the day it's due ) and a gas bill (same deal). But still zip. I guess you have to have an actual line of credit before they give you a score. All my credit history has at the minute is 5 credit checks... yay way to start of badly.

Killer Wench

Do you have a car? I would actually recommend getting a store credit card like through JC Penney or Sears or even a gas card. The credit limits aren't high and you can only purchase items within their store chains, but it is a lot more manageable than a visa, in my opinion.

lil_lisa

Store cards have the highest interest rates going and since it's only used for one store you'll easily forget about it. I would not suggest getting one.

I just got my credit score this morning actually for the first time. I've only had an account open a little over a year but the only thing showing up on it is the credit card I opened a few months ago.

Overheal

It can take years before your score shows up. Mine just popped up properly a month or two ago: over 18 months since opening the card. 12 months ago I could get one of my reports, but only now have credit offers begun showing up. This is a sure indicator I have at least a modest scoring number but id be arsed to check what the actual value is.

As for attaining a perfect score, most experts say theres no need. Within so much percentage of the maximum score youre already getting the best rates on mortgages and loans.

Once you get mail offers though they start talking about 0% for 12 months and all this crap. It's still a staggering 15% APR after that (for me anyway) with or without annual fees - either way I've been shredding all of these offers. I don't think its terribly important to close out my secured CC just yet.

thenobody

Or it can take a few months.
I got all those offers months after getting a credit card. Also dump that crap. Also went to that website to get them to stop sending all those annoying letters and it worked.
Think my credit score was over 760 in about 7 months. Think thats alright. Told it when a check was done to rent an apartment.

And i dont get the big deal with even thinking about or considering interest rates. It shouldnt matter. Pay the bill in full each month and will have no issues. Dont spend money you dont have.

Black Swan

thenobody wrote: »

Think my credit score was over 760 in about 7 months. Think thats alright. Told it when a check was done to rent an apartment.

That would probably be one score (from one of the big three credit bureaus, Equifax, Experian, and TransUnion), meaning that you would have 2 other scores you did not see. They generally agree with each other, but there have been exceptions, and an exception can result in a denial of credit. 760 is a good score. You might want to check the others. Each bureau is required to provide you with a free report once a year (more often for a fee).

lil_lisa

The report is free, but the score itself is $7.95 I think.

narddog

lil_lisa wrote: »

The report is free, but the score itself is $7.95 I think.

Yeah, I've done the free report to get my credit score. Legally you are entitled to one free report per year. The report gives you your score, but if you want the details that went into this score, you'll need to fork out a few dollars. From my experience, here's some things I've learnt about the whole credit score thing in the US

- Open up a few lines of credit, but not too many. 3-5 is ok, anything more is too much.

- Don't just open up a line of credit, eg a credit card, and not use it. The credit score is a measure of how well you manage money, not how many CC's you have, or even if you paid off that car payment early. It's my understanding that if you use and manage about 30% on your line of credit, over a long period of time, your Credit score will improve. The credit score companies want to see that, for instance, you have a Visa card with a $2500 limit, of which you spend around $750 -$800 on per month. If you pay that $750-$800 on time each month you are showing the reliability they base scores on.

- Make sure your monthly bills are paid on time each month. Any late notices or failures to pay end up as a big black mark on your score.

- Always use the free credit report each year. There may be mistakes in there you can rectify or correct. There are 3 credit report companies, and you can get a free report from each. (Transunion, Experian & Equifax).

Hope this helps

narddog

Correction to my post above. The freecredit report gives you details about your credit history, but not your actual credit score. To get that you need to pay $8.

spideog7

narddog wrote: »

- Don't just open up a line of credit, eg a credit card, and not use it. The credit score is a measure of how well you manage money, not how many CC's you have, or even if you paid off that car payment early. It's my understanding that if you use and manage about 30% on your line of credit, over a long period of time, your Credit score will improve. The credit score companies want to see that, for instance, you have a Visa card with a $2500 limit, of which you spend around $750 -$800 on per month. If you pay that $750-$800 on time each month you are showing the reliability they base scores on.

I've been doing that basically using my CC in place of my Debit Card and then just paying it off every month/every 2 weeks. Then someone (who used to issue mortgages in a bank) told me you shouldn't do that. Apparently if you really want to build your credit you should leave a balance on it at the end of each month and just make payments like minimum payment or whatever, enough to not get charged interest but also enough so that it looks like you're managing your money well. I suppose the idea is that they're looking to see how you've managed credit you needed before rather than just paying it off, which shows that you obviously have the money and don't really need to manage the credit.

It's the bigged pile I've ever heard, surely if you were managing your money you wouldn't be spending beyond your means but I suppose that's not the American way!