A credit score is a metric used to determine if you are deserving of a loan. Credit scores are determined by the status of your credit report. If you have a high credit score, you would be considered as someone with a good credit reputation, this makes potential lenders view you as a credible borrower. As an immigrant in the USA, you do not have a credit history; you have to put effort into building a good credit score.
There are several ways to build credit fast.
As an immigrant, you would have to sign up for a credit card before you can build a credit score. However, credit card companies will also want to know your credit history before approving your application for a credit card. There are few cases where this doesn’t apply;
- When the customer opens a bank account: Banks require that the immigrant opens a bank account. Credit card companies require their customers to have good credit reports to be sure they are creditworthy and that they won’t pose problems when it is time to pay back whatever they charge to their cards. Having a bank account that shows that you have a stable source of income would meet this requirement.
- Citizens of the USA have a Social Security Number (SSN), and the SSN and other vital information like name and date of birth are some of the documents required to apply for credit cards. Immigrants that are not permanent residents of the USA are not expected to have a Social Security Number; they have the Individual Taxpayer Identification Number (ITIN). In some credit card companies, immigrants are allowed to use the ITIN to apply for credit cards.
After securing a credit card, you need to build your credit score to make your credit report look good to prospective lenders. So, your next action should be learning how to build credit fast, there are several ways to build credit fast and I will dive into more details below;
IMPORTANT TIPS ON HOW TO BUILD YOUR CREDIT SCORE FAST
- Endeavor to pay your bills on due dates
- Maintain 30% credit utilization
- Avoid opening new accounts
- Become an authorized user on a trusted person’s account
Endeavor to pay your bills on due dates: Payment history plays an important role in the calculation of credit scores. Therefore, paying your bills as of when due will make your payment history look good. If you struggle with paying bills on due dates, you can decide to;
Make payments two times a month, preferably days before the due date of your loans. This would help cut down on your principal and also make your credit history look good,
Initiate auto-pay from your bank account; this way, you do not have to worry about forgetting due dates because your bills get paid automatically.
Maintain a high credit utilization ratio: Your credit utilization ratio is the amount of available credit you are allowed to use. You should know how to keep your available credits high and how to make sure your running debts are low. It makes your credit score high, especially since the credit utilization ratio is the second most important factor in calculating your credit score. Requesting for an increase in credit limit is a good way of keeping your available credits high; credit card companies allow their users to request a limit increase over the phone.
Avoid opening new accounts: Although you are advised to apply for credit to increase the length of your credit history, you are strongly advised to limit the way you open new accounts. This is because constantly applying for new credit cards exposes you to hard inquiries; the inquiries can decrease the average age of your accounts, which in turn affects your credit score.
Become an authorized user on a trusted person’s account: If you have a family member or someone you trust that has a good credit history, you can register as an authorized user on the person’s card. It would help you build a good credit history, which in turn allows you to have a good credit score.
Leaving your old accounts with good payment history open is another way to increase the average age of your accounts. It is also advised that you monitor your credit accounts regularly, that way you are up to date with any changes that occur on your credit account. This can be done easily by signing up for credit monitoring services.
ALSO READ: Why Credit Score is Important for Immigrants
Is it possible for a non-citizen of the USA to get a credit card?
Answer: Yes, in the absence of an SSN, a non-citizen can apply for a credit card with the ITIN.
For potential lenders to regard me as a good borrower, how high should my credit score be?
Answer: Having a 580 credit score is fair but a 670 credit score is better, so, if your credit score is 670, potential lenders will regard you as a credible borrower.
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