Building Credit in USA

[UK2ATL 9]

Hi,

Just wondered how you guys have gone about building credit here in America? Credit Cards, Cell Phone Contracts, Leases Etc... any help will be appreciated

M

[Caryh 5,206]

this question comes up all the time in the "Moving Here and Your New Life In America" section. It is on topic in that area and you can read lots of advice based on what works best for different people. For my wife, we just joined her to some of my accounts and got a store credit card for her. Her credit isn't as good as mine yet, but its reached the upper six hundreds now. We wanted to add her to a refinance of our house to, that would have really helped her credit score, but her current lower score would have pushed the mortgage rate up by a percent, so we skipped adding her to that. But she is on the house title now. We also bought her a new car and we're both on that loan.

Getting a prepaid credit card is another method I see used. You put like $500 down on a credit card that you can draw from. After a while they actually extend you credit. Department store credit cards are easy to get and help. Getting and installment loan and paying on time. To get a good credit number, you need to use credit but not abuse it. Keep credit card balances at about 1/3 the credit line. Using a credit card and paying off the balance each month works, but not as well as keeping a small balance.

[JstaRebel 48]

Hi,

Just wondered how you guys have gone about building credit here in America? Credit Cards, Cell Phone Contracts, Leases Etc... any help will be appreciated

M

The first thing I did was to get my Dominican S/O her own checking account. I'm one that does NOT do joint accounts. Secondly, I ordered ONE of my credit cards in her name using her SS#. (This will show up on her credit report along with her new bank account information). Waited 6 months , money in her checking account, no problems, bi-monthly deposits. We went to her bank set up a collateral credit card using a newly set up savings account for the line of credit on the card. Had her use her card monthly and pay off the balance every month. ( you don't need a lot of money) This establishes a payment history. It's been a year and a half or so, and my S/O has really good credit now. It may take a little time, but it works well.

Hope this helps..

[Juliet and Steve 93]

Good advice above. especially the collateral credit card using a saving account for the line of credit.

In past years (which may or may not be available any more) a person could open a credit card by sending the credit card company for instance $500 and then get a credit card with a $500 balance but this may have been changed in favor of collateral bank issued credit cards. This is not a pre-paid card rather it's a collateralized card.

Cell phone contracts and leases will not help your credit as they are never reported. However if you break a lease, or are late in paying your cell phone bill--these will be reported have an adverse effect.

Adding a spouse to your credit card will help the spouse's credit (as long as yours is excellent--if yours is bad it will have a negative effect).

Open a checking account or two, and concurrent savings account (at two different banks), place just $100 in the savings account, and never, ever, overdraft, and leave the money there. The "machine" (credit industry's eyes) see the savings account and the two checking accounts and the credit rating ticks up.

If available buy something with a collateralize loan. For instance buy a $200 bicycle (if you like to bike) and take a loan out for two years. Pay faithfully--never, ever be late, not once! Also do not open such a loan and then immediately pay it off. It's ok to take out a 3 year loan and pay double payments but it's duration that the machine wants to see, it likes to see reliability and consistency and ignores a single big pay-off but notices payment that are double the minimum.

As advised above, store credit cards are easy to get (after all their rates are enormous and fees horrendous) use them, but not in a big way--and pay them off twice a month. You are warned--pay them off monthly and eventually they will get you. I've seen people pay off the monthly amount not realizing that there was a $0.40 interest charge and experience a fee (some charge a minimum montly interest fee of $4, so the forty cent becomes $4.00). They are useful but dangerous.

Eventually get a credit card from a major (Citi, Bank of America, Chase, etc). Use it but pay it off twice a month (Is anyone really silly enough to be paying 14-23% annual rate?

Once you have good credit the cards will taunt and tease you, this can be a good thing (my last two trips to Cebu, Philippines created two $68 (5%) rebates, but it can be deadly too.

There are numerous studies that show that for most people the human brain does not equate using a credit card to charge $200 with the same feelings as taking four fifty dollar bills out and giving them to a vendor. The brain often has the idea that it's not really spending if it's on a credit card--that's deadly.

Remember--for many cards, miss one single payment and your interest rate can jump from a teaser 0-7% all the way to 29.9%. And that is 29.9% above prime so if (when) interest rates climb to 5% the default rate can become 34.4%--This form of credit can destroy families, beware.

Beware of tax liens and lawsuits--if you are sued, even in small claims court, your credit score can take a big hit. These items are reported publicly and the machine sees them.

The machine is thorough, it sees most things, pay every bill on time or early, and in two years the person will have a good score, in five an excellent score.

In my opinion never have a credit card plus a savings/checking card with the same bank. Read the fine print and you will see that the bank can seize funds in one account to pay another.

I hope some of this helps.

Edited March 16, 2013 by Juliet and Steve

[david'sgirl 134]

There are multiple answers for this on VJ. Try doing a search if you need more. Here is a link to one:

http://www.visajourney.com/forums/topic/394826-building-credit-rating/

My husband and many others have found the Capital One credit card to be a good place to start. If the USC has an existing account you can add spouse as a secondary card holder. It helps too. I added him to my Sears card which is backed by Citibank and it increased his credit score.

Until you apply for something you will not exist to creit bureaus. Go to Credit Karma web site and create an account then apply for cards or a collateral small personal loan.Check back time to time and you will be able to see your progress.

[kzielu 1,149]

Approximately a year to have decent score. Started with joint credit card with my wife.

Cell phone contracts are irrelevant from credit point of view unless you stop paying - then they become relevant. Any other payments - same rule.

[optimisticchic 7]

Thanks for the advice guys. I have read through VJ find how build credit but all the advice is for couples saying "add spouse to account' or obtain credit card. What if new to the US,not married and seeking for job? How do you build your credit from scratch? Thank you

[Caryh 5,206]

Thanks for the advice guys. I have read through VJ find how build credit but all the advice is for couples saying "add spouse to account' or obtain credit card. What if new to the US,not married and seeking for job? How do you build your credit from scratch? Thank you

You need to use credit in order to build credit. Open a checking and savings account and deposit money in them. A secured credit card (backed by either a deposit to them directly or a savings account) and installment loans are probably your best starting point. If you have no job, its going to be hard to do any of this. No one wants to lend money to someone with no income. Obviously if you have no income coming in, you're just using up your assets or savings until they're gone. But you might be able to talk with the bank your savings are in, and get a secured credit card. Thats assuming you brought savings and are not currently being supported by someone else, such as family.

[JstaRebel 48]

Thanks for the advice guys. I have read through VJ find how build credit but all the advice is for couples saying "add spouse to account' or obtain credit card. What if new to the US,not married and seeking for job? How do you build your credit from scratch? Thank you

Start with a job, or a student loan to obtain job skills to get a job. Student loans use to be fairly easy to get, and you will have to start showing a responsible payment history for something in order to start to build credit. No one gets credit easily these days, and it is also not something that happens overnight. I know of nothing in this world worth having that is free or easy. Usually, it involves work in one form or another.

Good luck!