Tips for building credit as a new US citizen/resident

For just about anything you want to get off your chest about credit cards.
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Au2Us
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Tips for building credit as a new US citizen/resident

Postby Au2Us » Tue Jul 05, 2011 3:39 am

Hello there all,

Within the next year or 2 I am looking at moving over to the US with my fiance, who is an American citizen. One thing that will set me back a bit with moving overseas is having to establish a credit history over there.

I currently have 3 lines of credit (1 Mastercard, 1 Visa, 1 GE in-house credit line) at the moment with a total available balance of $12,000 between the 3 cards. I always pay them off once I recieve my statement and never go over $400 outstanding at any one time unless I am planning a trip to the states, and if that happens then I don't go over $2000.

My credit file over here has nothing listed on it, but that's good for our reporting system. We don't record on-time payment history with our credit bereaus, only negative payments. I have no defaults, judgements or charged-off accounts against my name.

I've been reading around alot and have come to the conclusion that if you have a bad credit score it is hard to obtain lines of credit (of course!), but I don't see anything about how easy it is to start a credit file when you move to America. My fiance goes to college and I am 'planning' to look for work so I can also look to go through college also and get a degree.

Not looking for a great deal or anything, even a store-card would be suffice if it was somewhere I could see myself shopping (eg Wal-mart or Sams Club). Over here I had no problems getting my first credit card, but the GFC seems to have affected America alot harder so I imagine the lending criteria are alot tighter. I know alot can happen in 2 years, but wanting to get an understanding of how things currently are.

Thanks


DavidNY
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Postby DavidNY » Wed Jul 06, 2011 10:35 am

There are several things you could do, provided you have a US SSN.

1. Apply for an unsecured credit card. The worst they can say is "no."

2. If that doesn't work, apply for a secured credit card that reports to credit bureaus.

I recommend Bank of America's Secured Visa. There's a $39 annual fee, they report to the bureaus, and they may convert it to an unsecured credit card after a few months.

Au2Us
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Postby Au2Us » Wed Jul 06, 2011 6:00 pm

DavidNY wrote:2. If that doesn't work, apply for a secured credit card that reports to credit bureaus.

I recommend Bank of America's Secured Visa. There's a $39 annual fee, they report to the bureaus, and they may convert it to an unsecured credit card after a few months.


I have a question about secured credit cards. I do work with a financial provider of credit cards, and as far as I know secured lines of credit haven't been openly available here since the 1990's.

How do these work? Is it just like getting a secured personal loan where you would, as an example, list your car as security for the debt if you are unable to pay it back? Or being a credit card which can sometimes have lower limits, do they list something else as security?

I have dealt with a few cards of this type since working in finance, but they are old cards/accounts from the 80s and the cards have been long since blocked by us, so I haven't seen the security ever being pursued when payments are defaulted.

These accounts have a higher acceptance rate I assume. I feel I have good credit management so I don't see myself as someone who can spend more than I am able to afford to pay back in a months time.

DavidNY
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Postby DavidNY » Thu Jul 07, 2011 12:50 pm

When you apply for a BofA Secured Card, you send a payment for whatever you'd like your credit line to be; the minimum is $300.

You then will have two accounts. One is your credit card, the other is an interest-bearing savings account where your deposit is. You may add funds to this account to increase your credit line.

Here's a link to the card.

https://www.bankofamerica.com/credit-cards/marketinglist.action?context_id=marketing_list&category_id=2029

Au2Us
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Postby Au2Us » Sun Jul 10, 2011 7:55 pm

DavidNY wrote:You then will have two accounts. One is your credit card, the other is an interest-bearing savings account where your deposit is. You may add funds to this account to increase your credit line.



This intrigues me. So it's kind of like loading up a pre-paid debit card, but they keep the money until you are approved for a non-secured card?

Do you actually get the interest that your initial deposit accrues?

American cards are so different from what I am used to. Alot more factors to consider when looking for a card.

Dulcinea
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Postby Dulcinea » Wed Jul 13, 2011 3:32 pm

Greetings! I am by no means an expert on matters of credit but I think I can chime in with some help for you. I went through a similar experience a decade ago when I moved to the US for school from Canada. If there have been changes since then I imagine that things are only more stringent now.

First, my credit history in Canada was of no matter to the American banks. My credit was quite good there, though, so I don't know what would have happened if I'd had bad credit in Canada, but your situation sounds similar. The banks treated me exactly as if I had no credit at all. I tried applying for a regular credit card and was declined (no credit history) so I had to opt for a secured credit card. I deposited $500 and got a $500 secured card from Wells Fargo. After six months of use and regular payments (I paid off the total each month), they changed me to a regular non-secured card. My credit limit increased steadily (this was the crazy nineties) despite the fact that I was a student and, although I had an income, it was pretty low for many years.

Second, I don't know if this was a factor, but I managed to get my Canadian gas card changed to a US card from the "same" company (they are completely separate entities for most purposes, but they were able to look across the border into my records in Canada). I don't know if this made any difference to the fact that I was swapped to a regular non-secured credit card after 6 months, but I suspect it didn't. For all intents and purposes, the border between countries, even neighboring ones, is like a giant impenetrable wall.

Regarding your question about the secured card money, I can't remember very well about whether or not I received interest on my security. Sorry, it's been a while. I suspect that there is a law about what interest they have to give you and it's probably very very low.

Read on these forums about which secured credit card to get and make sure to get well-read about American credit scores and how they work. It is a counter-intuitive system (you get penalized for closing off credit cards?) -- until you realize that it has more to do with your rating as a source of profit to the banks. Whatever you do, settle on the main credit card(s) you want early on in the process as the length of your credit history will play a relatively large role in your credit score for some time to come. Also, if after you get your first 'real' credit card you plan on having more than one card, try to cluster your applications. Although it's true that applying for credit will not give you a big ding on your credit score, many repeated applications will lower it and, starting from where you and I did and will, you can't afford to take too many hits. (Inquiries that occur within a 14-day period are treated as a single inquiry - other periods may be quoted but this is the most conservative.)

Good luck and welcome to the US!



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