Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” She writes “Opening Credits,” a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
Dear Opening Credits,
I’m in the process of gaining citizenship in the U.S. As part of the process, I got a work permit and a Social Security number. I started using a credit card about six months ago, before I got my Social Security number, using an Individual Taxpayer Identification Number.
The bank claims that it can combine my new Social Security number with my credit profile and give me a credit score reflecting the last six months that I have used the credit card.
How long do you think it’s going to take them to combine the two? And what credit score should I expect? My fiancee and I are thinking of buying a house next year. Will we be able to do that? – Avi
Although you’ve already been successful in getting your first credit card (which is a major accomplishment, so congratulations!), you seem to be a little hazy about how credit reporting and scoring works.
Don’t worry – that’s normal. In fact, many people who were born and raised in the United States are just as confused.
So here is what you need to know. As you’ve discovered, a Social Security number (SSN) is not always required on a credit card application. People who were born outside of the country can get an Individual Taxpayer Identification Number (ITIN) and use it instead. That’s what you probably wrote on your application, and it allowed the credit issuer to identify you.
When you were approved for the credit card, your credit profile, including your ITIN, began appearing on your consumer credit reports. That’s because the credit issuer should have sent it to the three major credit reporting agencies (TransUnion, Equifax and Experian) soon after granting the account.
However, now that you have a Social Security number, you must rescind your ITIN, and the credit bureaus must be notified to transfer your credit history associated with your ITIN to one associated with your SSN.
But first you must notify the Internal Revenue Service of your new SSN. Follow the instructions outlined by the IRS and be sure to include a copy of your ITIN and new SSN. You should then receive a letter from the IRS confirming the change. Then you can include a copy of the letter from the IRS confirming the change to your new SSN when you write to the three credit bureau agencies to make the request. The transfer shouldn’t take more than 30-60 days and shouldn’t affect your credit scores.
The addresses for the credit bureaus are:
P.O. Box 740241
Atlanta, Georgia 30374
P.O. Box 2002
Allen, Texas 75013
P.O. Box 1000
Chester, Pennsylvania 19022
What’s included in consumer credit reports
Credit reporting agencies compile all the data that comes to them from lenders into consumer credit reports.
Up at the top of these reports are your identification details, such as your name, Social Security number or ITIN, address, driver’s license and date of birth.
Following that is a record of how you’ve been managing your credit accounts, such as credit cards or loans, as well as anything that might be a matter of public record (such as a bankruptcy and judgments).
Credit scoring companies such as FICO and VantageScore take the data listed on your credit reports and input that into mathematical models that predict lending risk. The scores range from 300 and 850, and the higher your score, the more creditworthy you are.
Although your scores will fluctuate based on how you manage your credit accounts, the date your credit history began is static. It won’t change if the bank identifies you with your Social Security number instead of your ITIN. There is no reboot.
Your credit history should have started six months ago, unless for some reason your card is one that doesn’t report to the credit bureaus. But judging from your conversation with the issuing bank, it sounds as if it does.
How to make the best out of your credit
It is important to understand that credit scores are always based on your borrowing and repaying actions, and recent activity is factored in most heavily. Therefore, if you make a payment more than 30 days past due, it will have the greatest impact that first year when it occurred, and slowly fade in importance over time.
To check your credit reports regularly – which you should do periodically to check for fraudulent activity – you can go to AnnualCreditReport.com, where you can pull each of the three credit bureau reports for free once a year. To check your credit score, you can use the free tool here at CreditCards.com or for free through certain credit cards.
To qualify for a great mortgage, your scores should be at least in the mid-700s. You can start to achieve that by using the card you have effectively. Always pay by the due date and in full. Check your scores now to see what they are, and then again when an entire year has passed. You should see improvement.
To raise scores faster and more dramatically, get a second credit card or credit-builder loan and treat it the same way. That way, you’ll prove that you can use different types of credit products wisely. That will be reflected in your scores, and a bank that offers home loans is sure to be impressed!
Meet CreditCards.com’s reader Q&A experts
Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com’s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.