The credit history in America is a confirmed set of all credit financial transactions, which is perceived by government agencies as a full-fledged rating of a person’s trustworthiness.
What does the credit history in the USA affect?
To make it clear why you need to have this very history and use not only debit accounts, let’s list the areas where a good credit history significantly simplifies life.
- The cost of renting a home – with a good credit history, you need to pay only the minimum deposit amount on top of the monthly rental cost, or not pay them at all. With an undeveloped credit history, you may either be refused a rent, or you may be charged a commission in the amount of another monthly rental cost.
- Terms of contracts – insurance, cellular communication and any other. The better the credit history, the lower the cost of services and more favorable terms. It also works with utilities – not every company will cooperate with a homeowner with a bad credit history.
- The interest rate on loans – the higher the credit history score, the lower the interest on any loan (mortgage, car loan, consumer loans, etc.).
Credit score indicators
Credit rating or credit score points are calculated by special agencies based on the amount of your credit limits, the repayment procedure, and the presence of late payments. You can check your credit score on special websites, but they give only an approximate result.
Even when you just arrived in the States, your rating is not zero. The minimum is 630 points.
Credit score scale
- 630 – minimum. In fact, this is the absence of a credit history.
- 630-690 – satisfactory. The available credit limit is from $300 to $700-1,000, it is expanded in the absence of overdue payments.
- 690-720 – good. The credit limit can be extended up to $2,000-3,000, the confidence of banks is increased.
- 720-850 – great. Credit limits of about $5,000 are available for each account, interest rates are reduced, bonuses are available.
- 850 – max. All the possibilities of the American credit system are open.
In addition to the credit rating, there are several other important reliability indicators:
- the age of the credit history. As a rule, banks are reluctant to work with those whose credit history is younger than 5 years. The system implies the gradual building of a good story, so the ideal story starts from 8 years old. It is believed that during this time a person accurately shows his responsible or vice versa, careless attitude to money.
- the number of credit lines (accounts). The more loans you have properly repaid (absolutely everything is taken into account, even transactions that did not pass through banks – rent, installments, whatever), the better the situation is. The ideal is about 15-20 credit lines for 5-8 years of history.
How to start creating a credit history in the USA for a non-resident?
Based on the starting position, you will need to choose a suitable strategy. Let ‘s distinguish 4 main groups:
- Citizens or residents of “related countries— – for example, citizens of Germany, Hong Kong, Japan, Argentina, Great Britain. You can have a status in one of them, for example, become a resident through investments, studies, work.
- Citizens and residents of “unrelated countries— – for example, Russia, Latvia, Belarus. There are no AMEX Global Transfer, AMEX Nova Credit programs here – credit history cannot be transferred to the USA in any way.
- Canadians are citizens, residents of Canada, as well as holders of a Canadian social security number or a Canadian credit history.
- Businessmen – American companies, for example LLC, can safely apply for a credit card. The only thing worth remembering is that the more owners and persons with access to cards, the more / longer due diligence checks in the bank.
What is worse than a bad credit rating or its absence?
A bad credit rating is very different from not having one. In some cases, lenders may issue loans to non-residents without a credit history. If you don’t have a credit history, lenders don’t have any information. But with a bad rating, no one will definitely want to issue you a loan. Fixing a bad story can take many years.