If you are in America and ever want to Buy a Car on loan, get cell phone on your name , buy a house, even get a personal loan, or get a credit card for rotation of money…You NEED GOOD Credit history…Let’s look at some of the pitfalls and how to build credit history.
How do you get to Build good credit history in US as Foreigner ?
First of all, when you arrive in USA, you do not have credit history. You have to build your credit history slowly. If you are a student you can apply for student credit cards in the banks in the school. If you are on H1B visa and would like to build credit history, first you need to open a checking account in a bank like Chase or Bank of America or any other good bank. After that, ask them for a SECURE credit card. It is similar to a debit card, but a credit card. What you do, you give the bank $500 and get a secure card, so your credit limit is $500. You can start using your card and use it and pay it off completely by the month end. Never keep outstanding balances. After 6 months, you can ask for increase in credit limit. If you have paid your balances on time fully and maintained well, you should get an increase in credit limit. Slowly, after that you use your card and start building credit history.
Here is the trick : DO NOT APPLY for more credit cards in stores or anywhere else. It takes time to build credit history, so give it an year or so. Also, do not have more than 3 – 4 credit cards at the maximum. I recommend only 2. Your good credit history will make your bank give you more limit. Some ways to build credit history are : Have a utility bill like Electricity bill or phone bill on your name, Pay rent on your name.
Build Credit History using Personal Loan
One of the other options is to apply for a loan at one of the promising Y-Combinator funded fin-tech startups founded by international students, who went through the same journey. You have an option to indicate that you want to “Build Credit History”, even if you do not need money. You can use the loan secured to pay for your bills and start building credit history. You can get loan anywhere from $1,000 USD to $35,000 USD depending on your eligibility, even without credit history. You start building credit history, if you get loan approved and use it. We have partnered with them, you can Apply for Loan to Build Credit History at Stilt
How to Check Free Credit history in USA as International :
You can check your credit history for FREE once in an year. YOU will not get the actual credit score for free. According to Federal Credit bureau act, you have the right to know your credit history. You can check it for free at : https://www.annualcreditreport.com . If you need score, you might have to pay. Credit history has all the info about your finances and personal info. It lists all your accounts, address you live in, amount of credit limit you have, your credit inquires that got rejected, etc. It is very detailed. Go the website I have given above and you will get more info. Check other Post for credit score concept !
What is the BIGGEST Mistake many people do with Credit Cards in US ?
Many of us, when we go shopping at a store let say Kohl’s, Old navy, GAP, Sears, Macy’s or any store you can think of, the cashier asks for a question : Would like to apply for a XXX ( store name) card and save an additional 30% ? And they will say, you will get 10% discount every time you buy here. Many of us, especially who do not know the concept of credit cards and credit history, just do simple math and say, I will apply to save money, But, that can be tricky and the BIGGEST mistake ! NEVER EVER DO THAT. If you keep applying for too many credit cards and you do not maintain them properly by paying on time and manage the credit well with them, you can ruin your credit history. It is a business strategy the company is using on you to lock you down and let you buy only at their shop. It is not the applying to too many cards that will essentially ruin your credit, it is not able to manage all of them well, by paying on time…
If you are new to America, the chances of you messing up your credit history is even higher, if you apply to credit cards without any credit history. Usually, many try to apply in the first 6 months or so without proper credit history and they end up getting rejected for the credit cards. If you get a rejection, it stays on your credit history for at least 2 years. It lowers your credit score. So, do NOT Do that. It seems very tempting, but NEVER do that, it can ruin your credit history. You should own credit cards from Banks and use them instead.
Again, DO NOT Apply for more credit cards because you will save 30 % on something….It screws up your credit history !
What has been your experience ? How would you build credit history