4 things to know about building credit in the United States

International Banking

For most new residents in the United States, starting a credit history is a very important step for building a solid financial foundation.

Side view of a woman handing over a credit card to a young, bearded man in a shop.Unfortunately, the history of transactions and strong credit you may have established in another country won’t transfer to the U.S. system, so it’s important to know a few basics to help get you started here. The four steps below – along with the links to resources with more information – may help direct you.

Understand what influences credit scores

Your credit score – as prepared by FICO and other companies – is determined mainly on your history of managing debt. Paying your debts on time each month – including rent and utility bills, for example – is the most significant factor in affecting your score, according to the Federal Deposit Insurance Corporation (FDIC).

A Social Security Number is a big help

While technically not essential, a Social Security Number (SSN) is very important for starting your credit history – especially if you are working in the United States. Having an SSN allows credit reporting agencies to start a credit file for you as your employer reports your wages to the government. It’s much more difficult to build credit without an SSN.

The Social Security Administration website has useful information about how to get an SSN.

Try starting with a credit card

If you have already opened a savings or checking account, your bank may be able to help you with getting a credit card. If you are unable to qualify for a regular credit card, you may consider a no-fee or low-fee secured credit card. This is a credit card for which you would keep a cash deposit (as collateral) in an account with the financial institution issuing the card. (NOTE: Some secured credit cards may have fees or a higher interest rate, so it’s important to shop around, as the FDIC suggests in this article.)

It’s a good strategy to keep credit-card balances low (below 30% of credit limit) and to pay back the balance amount each month in full to help raise your score.

Be patient

The process of getting your actual credit score may feel a little like waiting for a plant to grow. It usually takes six months before a credit score can be calculated, according to Experian, one of the three major credit bureaus.

Once your credit score is established, you may order an annual report from AnnualCreditReport.com (or call toll-free 1-877-322-8228) to keep a record for yourself and to check for possible errors.

You can also watch this short video for more information on building a credit score:

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