What's a Credit Score?
If you plan on staying in the USA for a long period of time and eventually purchase a car or a home on credit, you will definitely need a good credit score. A credit score is a three digit number that helps lenders determine if you are creditworthy. It is calculated off your credit report: a document that records your payment history, the amounts you owe, the length of credit history, the mix of credit in use, and request (s) for new credit.
Lenders (banks, credit cards, auto dealerships…) will use this number to see how much credit they will give you and what interest rate they will charge you. Credit scores go anywhere from 300 to 850 with 850 being a perfect score and anything under 550 being poor credit. Lower credit scores often mean higher interest rates, need for cosigner, higher down payment, or even worst the credit application may be denied altogether. The good thing is that everyone starts off with good credit then it goes up or down from there.
In order to build your credit score, you will first need a social security number, but to get a social security number you will need a job offer (assuming you are eligible to work in the USA). Once you get it, you should apply for a secured credit card, and then charge an amount to the card that you can afford to pay off every month before your due date. This way you will not have to pay any of the high interest fees.
One thing that people often overlook when trying to build their credit is the statement date. It is usually a few days after the due date and that is when your credit card balance is reported to credit agencies, so be careful. Do not max out your credit card just after making a payment because it will show a high credit utilization ratio, and it will only drag your score down and prevent you from achieving your goal (s).
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