One thing many immigrants realize when they come to the United States is that their credit history doesn’t follow them. America is a credit-centered culture. You need good credit to buy a house, finance a car and obtain educational loans and even to get a new job. Here are a few tips to help new immigrants establish a good credit history and start enjoying the American life.
Open a Bank Account
Newly arrived immigrants should first apply for a Social Security number. Once you receive your number, open a checking or a savings account at a local bank. Keep this account in good standing to show potential creditors that you can manage money.
Get a Bank Credit Card
Obtain a secured credit card from your bank. A secured credit card simply means that the funds in your checking or savings account will be used as collateral if you don’t pay off your balance in a timely manner. Keep in mind that banks usually freeze some of your funds, typically the same amount as your credit card limit. Secured credit card limits tend to be low, but once you’ve established the fact that you make timely payments, you can apply for an unsecured credit card from your bank.
Obtain a Department Store or a Gas Credit Card
Department store and gas credit cards are usually easy to obtain. Just make sure that you make the monthly payments on time and the credit card company will send a positive report to the credit bureaus. Some gas and department store cards have very high interest rates, however, so don’t charge more on the card than you can pay off in a single month. Once you’ve proven that you’re responsible enough to make reliable payments, more companies will be willing to send you credit cards.
Use a Co-Signer
If you have an American member of the family with a good credit history, consider asking that person to co-sign a credit card or a loan application with you. Bear in mind that many people are reluctant to get into a co-signing situation because the person who co-signs takes on the responsibility for your debt if you cannot pay.
Finance a Store Purchase
Many retail stores allow you to purchase items on credit without paying interest for a set amount of time, typically 90 days. This financing is a kind of loan, so it helps you establish a good credit history if you pay off your balance on time. Try to pay off the entire purchase before the allotted “no interest” time expires to avoid paying high interest rates or any hidden fees.
Apply for a Major Credit Card
After spending about six to twelve months building up good credit, apply for a card from a major credit card company. Use the credit card comparison tool at Moneysupermarket to find a card with a low interest rate. Be careful that you don’t overextend yourself on credit while trying to build your credit history. Remember that establishing a good credit history takes time and patience.
Guest post contributed by Moneysupermarket.