In the US, a credit score is a very important factor in building wealth and does not only apply to citizens but also to immigrants that want to make sure they are taking good life decisions that their children can benefit from.
Almost every financial step in the US requires having a credit score. Certain steps such as education, buying a home and starting a business which involves student loan, mortgage loan, and small business loan respectively requires having a credit score.
Maintaining Good Debt
To build wealth, enjoy life, and keep up with expenses, people take several loans which are considered credits. Now not all credit is bad. There are good credits and bad credits, for example, student loans and mortgage loans are considered good credit because they come with lifetime values. Bad loans are the credit card debt that you incurred from buying things that you don’t really need and may not give you long-term value.
No Fear of Banks and Credit
If you are not an illegal immigrant, then you have nothing to fear about. Even if the banking system in your country is not reliable, the US banking system is reliable. You must have heard that in the US, the bank will always give back your money. Yes, this is true for FDIC-insured banks. FDIC, Federal Deposit Insurance Corporation means that the federal government will insure up to $250,000 of money in a single account, so when there is a problem with the bank or the economy and the bank can’t pull out your money, the bank will give back up to $250,000.
Immigrants can open a credit card just as you open a bank account with either your Social Security Number or Tax Identification Number. It is another way of managing money while you build your credit score.
Building Credit Can Help You Build Credit Score
The best practice for immigrants that are new in the US is, to begin with, a “secured credit card” and make sure to use it responsibly so as to be able to build a good score over time.
ALSO READ: What Is Considered A Good Credit Score
The only thing to worry about with credit cards is that is very easy to go into debt. This is because when you don’t pay your credit card bills, the amount you owe increases with interest. You can avoid this by paying your credit card bill is paid in time and living within your means.
If you would like to be informed on the next personal finance planning as an immigrant or family member of immigrants, make sure you subscribe via the newsletter box below. I promise not to spam you.