Do you live in America? All you need to know about how to build credit to get a FICO score that will make your life easier

If you are one of the thousands of immigrants who have recently arrived in the United States or are planning to move to that country, when renting a home, contracting a basic service, purchasing a car, and in some cases Be careful while asking for a job. , they will ask for your credit score. This is a three-digit code that special agencies determine from your payment history, the most common being the FICO score. Since a home credit history cannot be transferred, you need to start building one and the easiest way to do this is by ordering a secured credit card.

Financial Aid Apps Majority states that a secured credit card allows people with poor or no credit to open credit through a refundable deposit. The minimum deposit to request this is usually $200 and the portion of credit used must be used and paid immediately each month.

But how do you get a secured credit card? You must first open an account into which you will deposit collateral. This process requires you to provide your general information: name, address, date of birth and an email address; And confirm your identity with an official document with a photo, which can be a passport or driver’s license.

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They will ask you for Social Security or ITIN

You must also present your Social Security number, but if you do not have legal immigration status and are not eligible to get a Social Security number, you can replace it with your Individual Taxpayer Identification Number (ITIN). Here we explain how to get ITIN number. Some banks may also ask for bank statements or proof of income.

Once you get your card, find out what interest rate you’ll pay and don’t miss a payment. If you can’t pay the full amount available at the end of the month, don’t use it. In addition, if you consume all the money available in the first month and cannot pay it off, during the seven months of the agreement, you will only have to pay the deposit amount and the idea is that the card will have transactions every month. Is.

But if you can make the full payment every month, do so as it will improve your record. And if you don’t want a large amount of debt reported to the credit bureaus, pay off part of it before the court date.

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If you pay on time you will get your deposit back

If payment is not made on the stipulated dates, the bank will deduct the payment from the guarantee amount. But if the user makes timely payment after seven months, they will recover the deposit amount. Personal finance experts in the United States recommend that people, even though the credit amount is $200, spend only a maximum of 30 percent of that balance each month, which helps the score improve faster.

Additionally, to continue improving your credit score, it is important that instead of requesting a new card, request an upgrade to the next level; Moreover, it will allow you to get the benefits they offer. If you build good credit, you will level up from time to time until you reach the maximum.

The content generator known as Astute Traveler details that there are five tiers of credit cards. The first is a secured or unsecured credit card, ideal for students or immigrants who have recently arrived in the United States. Others are cash backs that reward cash between 1 and 5 percent of the amount consumed. The third tier is travel benefits that offer transferable points or miles to hotels or airlines.

Optimum or VIP level travel cards are the fourth level and although they have the highest rates on the market, they offer great benefits in travel credits, memberships, bonuses, points or miles. Finally, at the fifth level are American Express Black or Centurion, but it is obtained by invitation only to users who spend more than 250 thousand dollars annually.

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There are other mechanisms too

Although secured or protected credit cards are the most accessible mechanism for building credit, they are not the only one. According to Wells Fargo Bank, another route that can be used is to request that cards from the country of origin be reissued in the United States. Additionally, if any of your family members have a good credit history in the United States, you can ask them to be your cosigner or guarantor when applying for a loan.

“A cosigner is a person who lends to the primary borrower to help them qualify for the loan. If the primary borrower fails to pay, you are responsible for the payment and your credit history will appear on both of your credit reports, Wells Fargo Bank states on its website.

The person who has the credit card may allow you to become an authorized user on your account, i.e. give you an additional card. This way you will get your credit card without having to apply yourself. However, the primary user is still responsible for payments, so this solution is best suited for spouses or close relatives.

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Report payments of rent and basic services

Credit can also be built up using special mechanisms to report timely payments of house rent and water, electricity, gas or cable if they report your payments so they also count toward your score.

“Once you’ve established a credit account, manage it carefully: Pay your bills on time every month and stay within your credit limit. Missing payments, paying late, or going over your credit limit will lower your credit score, Wells Fargo warns, and also advises not to request too many credit applications at once, but gradually. -Do this slowly and strategically.

Three consumer credit reporting agencies: Experian, Equifax, and Trans Union update users’ credit history information every month. These reports include payment history; outstanding balance; Available Credit; length of credit history; Applying for new credit accounts; and types of credit accounts (mortgage, car loan, credit card), etc.

According to Wells Fargo, to find out your credit score, you can request a free copy once a year from any of the major agencies: Equifax, Experian or Trans Union, through the Federal Trade Commission’s website, or by calling toll-free 1. Can request. 877-322-8228 (available in English only). You also have the right to recover if you have been denied employment, insurance or other benefits, warned of identity theft, or have errors in the report.

How is FICO score calculated?

To calculate a credit score or FICO score, these agencies are required to report at least one consumer’s credit account during the past six months. “The FICO score predicts how likely a person is to pay credit obligations on time. That’s why credit or service providers use it to evaluate the credit risk of an applicant.”

The credit score or FICO score is made up of five aspects for which a specific percentage is assigned. is the first record Payment of bills weighs 35 percent of the total score; Then Loanwhich includes the amount of credit in use, amount available, and balance with a 30 percent weighting; ancient time Credit history accounts for 15 percent, here you can consider the age of the oldest account, most recent, newest and the average of all accounts.

the fourth element is New Credits whose weightage is 10 percent of the total. It takes into account the time since you opened your new account, the number of recent applications for new credit, and the time it has taken for lenders to look at your score. The last aspect is friends Weighing another 10 percent of credit, this section takes into account the type and amount of accounts the consumer has, experience in revolving accounts and installment accounts.

FICO Score Categories

FICO scores range between 300 and 850, although some types score higher. Higher scores indicate lower credit risk and lower scores indicate higher risk, but each lender has its own standards for approving credit applications based on the level of risk they consider acceptable. Higher scores guarantee lower interest rates.

However, each lender uses the score along with other information to determine what a good score is in the loan approval process. in general terms, lLenders consider a score above 670 to indicate good credit. There are five recognized categories of marks and they are classified as follows:

1. poor It ranges from 300 to 579, well below average, indicating that the borrower is risky.
2. fair It goes from 580 to 669, it is below average but you can get loans approved with it.
3. good Ranges from 670 to 739, which is close to or slightly above average.
4. very good This ranges from 740 to 799, above average and shows that the loan applicant is very trustworthy.
5. extraordinary is between 800 to 850 or higher, is well above average and represents an exceptional loan applicant.

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