Credit-building tips for new US citizen
Dear Opening Credits,
I will be moving to the U.S. with my family pretty soon and would like to know the best way to start building my credit score. I have been traveling to and from the U.S. in the past year setting up my business (as a nonimmigrant under a business visa) during this time. I also got a credit card approved by a U.S. bank. I did not have a Social Security number at the time so they approved the credit just with my passport and business information.
Now I have a work visa and an SSN and would like to know if this credit account will be linked to my score or if I must request a new card and start from scratch. Is there any U.S. credit bureau for non-U.S. citizens who have credit with U.S. institutions? I´ve used the card for almost a year and have managed it well, so I think it would help me in a positive way. What I would like to know is if all the transactions and credit history I have from the time when I did not have an SSN will be taken into consideration for any new credit I wish to open now that I have an SSN. Or does none of that help? Thank you. -- Jorge
Welcome to America -- and to your credit scores. You've probably already got them, so now all you have to do is take steps to ensure that the numbers are moving in the correct direction: upward.
The credit card you opened with your passport and business tax ID, and future accounts that you start with your Social Security number should be on the same credit reports -- and factored into your scores -- without you having to do anything.
I presume you used a Tax Identification Number (TIN) that the Internal Revenue Service issued to you to open your credit card. Some United States banks and financial institutions accept them in lieu of Social Security numbers. Your credit history -- and thus your credit scores -- should have begun the day you applied for the account. However, if after following the suggestions below, you do not find that your current card issuer is reporting your card activity to the credit bureaus, all you have to do is call your card issuer and request that it do so.
This is what you need to know:
What the credit reporting bureaus do. There are three major credit reporting bureaus in the U.S. -- TransUnion, Equifax, and Experian. There is no specific bureau geared toward those new to the country. Their task is to receive all of the information that is sent to them by subscribers (such as banks, credit unions, collection agencies and the courts), and then sort it all into readable files called consumer credit reports.
You can access free copies of your credit reports from AnnualCreditReport.com to find out how your credit card is being listed. You should see that it indicates when the card was opened, how much you're allowed to charge, what your current and highest balance is and your payment pattern. Checking your reports at least once a year to make sure they are accurate is a good idea as it can help you detect and dispute errors as well as reveal any fraudulent activity.
What credit scores do. Credit scores are derived from the borrowing and repayment activity that is listed on your credit reports. The most common score is called the FICO, and it ranges from a low of 300 to a high of 850. Scores in the mid-700s and above are desirable because they get you the best rates when you borrow.
FICO scores weigh some factors heavier than others. Timely payments and how you manage your debt load are the most important. If you always pay on time and keep your balance well below your credit limit, you're more than halfway toward a great score. Do so over several years and with different types of credit products (but without applying for new credit aggressively) and your scores will surely be in the positive zone.
You can pay about $20 to get your FICO score from myFICO.com. Knowing what your numbers are now will help you develop a plan to increase them if they're on the low side of the spectrum.
How to improve your reports and scores. Now that you have a Social Security number, a business and an established credit history, a larger world of credit is at your doorstep. You have one card; you may want to consider looking for another.
After you've pulled your reports and scores, you'll know what kind of credit risk you are and can pursue the best card account for someone in your credit score range. You can use CreditCard.com's CardMatch tool to see current offers. Just remember to read though the terms carefully. When you've identified the product that seems right, apply and then wait for a response. If you're approved, wonderful! Charge, but pay on time and in full. With two cards in action, your scores will soar. In the event you're denied, keep using the account you do have in a positive way, giving yourself more time to build your rating. Then try again in about six months. It won't be long until you're every issuer's dream customer.See related: FICO's 5 factors: The components of a FICO credit score, New citizen tips for building good credit
Erica Sandberg is a nationally renowned personal finance authority. She’s host of several financial web shows, and a frequent guest for media outlets such as Fox, Forbes, Nightly Business Report and NPR. Erica previously was affiliated with Consumer Credit Counseling Service and was KRON-TV’s on-air credit expert. Her book, "Expecting Money: The Essential Financial Plan for New and Growing Families," was published in 2008 by Kaplan Press.
Published: May 22, 2013
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