I moved from Germany to the U.S. in 2011, but I was facing a problem; I didn’t have a credit score or credit history. Doing the simplest things in daily life became a struggle. I couldn’t lease or buy a car, get approved to rent an apartment, obtain a credit card or make installment payments on larger furniture purchases without having a co-borrower on each transaction.
In the country of endless opportunities, I was limited by some sort of a score I didn’t have or understand. I spent the next few weeks learning how the credit system works, and how to build these scores from scratch.
The higher your score, the better your interest rate will be, which means you potentially could save thousands of dollars on large purchases. The credit score itself is just your entire credit report expressed as a number, and they range 350-850. Consider these tips to improve your credit.
• Keep your credit card utilization to 20% or lower per card.
• Avoid missing payments by setting up automatic, minimum payments.
• Report fraud immediately at www.ftc.gov.
• If you have derelict accounts/collections, you can make an offer to the collection agency to settle the account in exchange for a letter of deletion.
• Open a secured credit card; this is a prepaid, low-limit card that you can use, and which you always should pay down to $10 before it reports to the credit bureaus.
• Become an authorized user on a credit card of a relative who has exceptional credit — you will benefit from their credit history and their on-time payments.
• Pay all late payments in full.
• Don’t co-sign any loans, since any late payments will affect your score, and the debt will be counted against you in full, if you apply for a mortgage.
• Monitor your credit scores online; while these scores aren’t actual FICO scores, the free service offers insight into utilization rates and how to improve your score.
A good credit score can take some time to build. Focusing on the basics of on-time payments and keeping balances low will put you on the path to obtaining and maintaining a good credit score. It took me about three years until I was able to open credit lines without needing a cosigner.
– Christiane Busch is a German native and moved to Acworth in 2017. She is a loan officer at Fairway IMC. Connect with her at www.ChrisAtFairway.com.