A good credit history makes life in the USA considerably easier. It can help you buy appliances, furniture, a car or a house. A good credit history is often a requirement to rent an apartment, initiate telephone or other utility services and get a loan or credit card. Without a credit history, you significantly decrease your chances of having an application for a loan or credit card approved.
A credit history is a record of the payments a person has made in the past and the amount of money that person still owes. If you consistently pay your bills on time, you increase your chances of being granted additional credit.
Credit reporting bureaus, such as Experian and Trans Union compile data on consumers' credit habits and sell the information to creditors. Whenever you apply for a bank loan or credit card, the lender checks with a credit bureau. Only if you have a good credit record — meaning your record shows that you pay your bills on time — will the additional credit be granted. Any negative financial information is reported for seven years, while information about bankruptcies is reported for 10 years.
Unfortunately, credit companies in the USA don't look at payment records from other countries. So, according to credit bureaus in the USA, newcomers have no credit history.
How to Get Credit :
Avoid companies that advertise "instant credit, no matter what your previous credit history." They may not be reputable. To start building your credit history, you need to obtain credit from a reputable company or bank that reports to the major credit bureaus.
You may need to start small. You are unlikely to be accepted by a major credit card company such as Visa or Mastercard without a previous history. A good place to start is by getting a charge card at a department store or a mail order catalog; check first to see if they report to credit bureaus. After a few months of paying at least the minimum payment, your credit rating will show a good credit rating.
Some banks also give secured credit cards to people with no credit history.
Another method to build a credit rating is to buy large-purchase goods such as furniture or televisions on a secured financial basis. This means that the store sells you the items on credit, knowing they can take them back if you do not maintain payments. You build up your credit rating as you pay for these items on a month-by-month basis.
There is a danger, however. Some stores con naive people into buying low-quality products at high prices by breaking the payments up into reasonable monthly costs. Don't neglect the bottom line figure of any purchase — it is a mistake to just look at the monthly payment. And don't buy a product just to get credit. This method should only be used if you need the product anyway, and feel confident that you are shopping at a reputable store.
If you belong to a credit union, you may be eligible to get a credit card in just two to three weeks. A foreign American Express card may help you get a U.S. card in about two weeks. Other credit cards may require a four-to six-week wait for approval.
Checking your Credit Rating
Once you have established credit, it's a good idea to check your own credit before you apply for loans or credit cards. You can get a credit card report online from one of the major credit bureaus: Equifax, Trans Union, and Experian.
Credit Card Terms
If you need help with credit card terms, take a look at this glossary.
How Credit Cards Work
Most credit cards operate as revolving credit. This means that you receive a line of credit that you can tap into at will and pay back as quickly or slowly as you want, as long as you pay the minimum required each month. If you pay on time each month, the lender may increase your credit line, giving you more borrowing power.
Credit cards are great for establishing credit history, making travel reservations, purchasing products or services over the telephone or over the Internet, and as a convenience so you don't have to carry a lot of cash.
Credit Cards from Home
Using your home country credit card in the USA offers some disadvantages. For one, the bill for a foreign card goes to your bank at home and, at a cost to you, is converted to the non-American currency. Secondly, you must keep a bank account in your home country to pay the bills.
But if your bank in your home country does have a corresponding relationship with a bank in the USA, you may be able to leverage this relationship to get a credit card in this country more easily
When to Use a Credit Card
Americans appreciate the convenience of credit cards and tend to use them liberally. But because credit cards allow consumers to buy now and pay later, and because they are so easy to use, too many people make the mistake of viewing their credit card as free money. As a general rule, the interest rate on credit cards is much higher than on bank loans, and it is easy to fall into credit card debt. Adopting an "if I can't afford it, I don't want it" mentality will help you avoid a great deal of stress and financial difficulty.
Credit Fraud
"Credit problems? We can erase your bad credit, 100% guaranteed. Create a new credit identity — legally."
All over the USA, unscrupulous companies appeal every day to people with bad credit histories. They claim they can fix credit reports, for a "small" fee. Unfortunately, after consumers pay them large sums of money in upfront fees, these companies often vanish with the money.
In reality, no one can legally remove negative information from a credit report. The law does, however, allow consumers to request a reinvestigation of information in a file that is disputed as inaccurate or incomplete at no charge. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost.
If you do run into a crooked company, file a complaint with the Federal Trade Commission by contacting the Consumer Response Center. Although it cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations.
Managing Debt
If creditors are calling you to pay up, and you sense that you may be heading into deep waters, consider calling a debt counselor. A good place to start is the Consumer Credit Counseling Service, or CCCS, a nonprofit organization that provides credit counseling. They can't make the bills go away, but they can help you carefully review all your financial information — including income, expenses and debts — to develop a plan that will help you achieve your financial goals.
At CCCS, you and your counselor develop a monthly budget for living expenses and creditor repayment. CCCS then negotiates with your creditors to attempt to defer past due amounts, and in many cases, lower or even waive interest rates. The goal is to enable you to live within your new budget and to get out of debt as quickly as possible.
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