When you live in America, you definitely need a credit history, unless you are filthy rich or you can save for pretty much anything that you can pay for them in cash.
Most ordinary folks, though, will need a good credit history to avail of personal loans, credit cards, and other financial products that make life go round and round in the land of milk and honey.
So if you are a bagong salta, a newcomer, newly arrived immigrant or non-resident alien in America, you will need to build your credit history. Here’s a few tips and tricks to get you going.
Sign up for a free online credit report website.
There are plenty of websites and products that will let you check your credit score. I have written about this topic in the past few weeks.
The one that I use best is CreditKarma.com. This service is free and lets me check my credit report every week. The best thing is, it’s free! You get to see some ads every now and then, but that’s just how things work.
Apply for a secured credit card.
This is one of the things I did within the first few months of our arrival in the USA. I went to the bank where I opened a checking and savings accounts to open a secured credit card. It meant opening a savings account alongside the credit card. The credit limit of my credit card is the same amount of the balance in the savings account attached to the credit card.
The important thing here is to pay monthly and manage my credit card well. After about 6 months, they released the money in the savings account; closed the account; and increased my credit limit. That means I have proven to the bank that I can manage my finances, pay my dues on time.
Apply for a car loan or a personal loan.
The best thing I did in relation to our car is to apply for an auto loan at a credit union. They gave me a really good interest rate (7% annually) and I avoided a lot of fees. My interest would have been 24% annually if I went with the lending partner of the car dealership I got my car from.
You may also explore your options with personal loans at credit unions or online providers such as Upstart or Mobiloans. The important thing is to pay the loan monthly and mind you, don’t just pay the minimum amount. Pay extra or pay the amount in your agreement with the lending organization.
Open a store credit card.
It doesn’t matter which store it is. It could be Walmart, Old Navy, Shell, or any store that you frequently go to. It’s even better if you pay the full balance very month. That way, the credit card provider will report your balance and how you manage your credit . I know of a former office mate of mine who only opened a Walmart credit card so he can start building his credit until he bought a house.
If you managed your credit well, you will find that it will be easier for you to buy big ticket items or apply for financing. This is especially true if you buy a house or something big in the future.