Dear Credit Card Adviser,
I am a new immigrant to the U.S. I had a good financial report and history, but I understood that I cannot transfer my credit history. I would like to know how I can build my credit score here. I will appreciate if you can share with me how to do that and what steps I should take and if you recommend starting with a specific kind of card (maybe even one specifically created for those with a limited credit history). I am very interested in also learning how to best upgrade to an alternative credit card once I have established my credit history. Additionally, I am interested in learning if, as a recent immigrant to the U.S., I start with a bad credit score or an average one, and approximately how long it takes to build my credit score.
You’re correct that the credit history you had in your home country won’t follow you into the U.S. credit reporting system. You will need to build credit from scratch.
Because you have zero credit history in the U.S., I would start by opening a secured credit card, which requires a deposit to serve as collateral in case of default. The credit limit on the account will be equal to the amount you deposit. You’ll have to pay an annual fee, but the card will allow you to build credit as long as the bank reports it to the three major credit reporting agencies — Equifax, Experian and TransUnion. If you manage the account well, you should be able to qualify for an unsecured credit card after a year or so. The Bankrate story “10 questions before getting a secured card” discusses other important details about these cards.
There are many different credit scoring models, but the one most commonly used by lenders in the U.S. is FICO, which was developed by the company formerly known as Fair Isaac Corp. According to myFICO.com, it will take about six months after you open the credit card account before a FICO score can be calculated. FICO scores range from 300 to 850, with higher scores representing lower risk of delinquency.
You won’t start with a high score because you have to earn it. To do that, pay your bills on time, keep monthly credit card balances low and apply for new credit only when you need it.
Periodically, you should also check your three credit reports for errors, because inaccuracies can lower your credit score. You can order a free copy from each of the three major consumer reporting agencies once every 12 months through AnnualCreditReport.com.
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