Relocating to the US? You might be surprised to learn your credit history doesn’t travel with you. US credit reports are based on information from US lenders and creditors, so you’ll most likely be starting fresh. Don’t despair; not having a credit score isn’t the same as having a bad credit score. With careful planning, you can build a good credit score within a few months.
Why Having A Good Credit Score Matters
In the United States, your credit score impacts how much money you can borrow from financial institutions and loan rates and can even affect renting a house or apartment. If you plan to own a home, purchase a car, or have other long-term financial goals, you’ll need to start building and maintaining a good credit score.
US credit scores generally range from 300 to 850. Scores are based on a variety of factors found in your credit report, including the length of your credit history, how much outstanding debt you carry, your history of payments, and the total amount of credit available to you. While ranges may vary according to different lenders, generally, credit scores from 580 to 669 are considered fair; scores from 670 to 739 are considered good; scores from 740 to 799 are considered very good; and scores from 800 and up are considered excellent. Most Americans have scores between 600 and 750.
How To Start Building A Credit Score In The US
The first step to building a good credit score in the US is to apply for a Social Security number. If you are authorized to work in the United States, you are eligible to qualify for a Social Security number. If you don’t qualify for a Social Security number, an alternative is to apply for an Individual Taxpayer Identification Number (ITIN) issued by the Internal Revenue Service (IRS). Both of these numbers function as a link between any lines of credit you establish or accounts you open, allowing credit report agencies to begin collecting data necessary to calculate a credit score.
Applying for a credit card is the next step to building and maintaining a good credit score. Without an established credit history, you may not qualify for a traditional credit card. Applying for a secured credit card is a great option for those looking to build a credit history that will allow them to qualify for a traditional credit card in the future. With a secured credit card, you deposit a set amount of money in order to open the account. The card issuer retains this deposit as collateral while the account is active. As long as you make timely payments to your secured credit card, you’ll build a positive credit history.
Another way to build your credit score in the US is to apply for a credit-builder loan. A credit-builder loan gives you the opportunity to show that you can handle consistently making payments. Unlike a traditional loan, where you receive the money you’re borrowing upfront and pay it back over time, a credit-builder loan functions more like a savings account. You’ll make payments toward the loan in installments, typically over the course of 6 to 24 months, and receive access to the loan by the end of the loan’s term if you’ve made all your payments on time.
How To Prevent Lowering Your Credit Score
As you work towards building a credit history in the US, follow these best practices to avoid any penalties to your credit score.
- Always borrow responsibly. Don’t borrow more than you can afford to pay back in a timely manner. Having large outstanding debts will negatively impact your score, so stick to borrowing only what you need.
- Make all payments on time, including utility bills and rent payments. Late or unpaid balances can result in the debt being sent to collection agencies, which negatively impacts your credit score.
- Avoid opening any unnecessary accounts or lines of credit. Applying for a credit card usually triggers a hard inquiry into your credit, which can affect your score. Only apply for the credit you need.
Let Global Nurse Partners Empower Your Journey
As part of our Partnership Program, Global Nurse Partners supports nurses and their families throughout their transition to life in the US and offers guidance every step of the way. Learn more about our partnership program here and how to take your nursing career to the US.