Building your US credit history

Regardless of how great you’ve been at managing your credit in Australia, once you move you’re going to have to start from the very beginning building your US credit history.

It can be a little depressing knowing that your good financial habits back home basically count for naught once you step foot in the US, but there are ways to get leg up once you arrive.

Why do I need a credit history? Everything seems to be based on your credit history and score. Obviously any institution you seek a loan from will perform a credit check, but there are other reasons as well.

The easiest and cheapest way to apply for electricity, gas, water, internet and phone accounts involves a credit check. If you don’t have any history there’s nothing to check and I know that I’ve had to pay an extra $50 “bond” for my mobile phone and to get electricity and gas to my apartment.

While these tips mostly won’t help you for that initial set up period, where you’re getting settled into a new house or apartment, the faster you begin building your US credit history, the better.

Disclaimer: I’m not a financial wizard or guru. I did General Maths in Year 12 and even that was a stretch. All of this advice is based on my research and it’s best to do your own as well, to ensure you’re doing the right thing for you.

Here’s a quick breakdown explaining how your credit score is calculated in a pretty graph.

Social Security Number

You can still built a credit history if you don’t have a Social Security Number (SSN) but having one helps to identify your file. Think of the 318 million people who live in the US right now. Odds are some are going to have the same name, and maybe even live on the same street but in a different county or state. That just makes it easier for credit score companies to mix you up with someone else, which you don’t want to happen.

Secured Credit Card

The limit of a secured credit card depends on the amount you’re willing to put down as a refundable security deposit. You don’t need a credit score or report to apply for most of these cards and they work really well if you’re looking at building your US credit history. The credit limit on a secured credit card will vary according to who is issuing it and are usually between 50 and 100 per cent of the deposit.

Some issuers will offer bonus points or cashback incentives for using their credit cards. Just remember to keep your spend below 50% of your credit limit for the best chance at a great credit score. Here’s the lowdown on some of the best secured credit cards in 2017.

Face-to-Face

This depends on your people skills. And maybe your sales skills. But basically it involves printing out hard copies of your Australian credit history (eg credit card bills paid on time, savings) and go into your local bank. You’ll need to already have a checking or savings account with the bank for a good chance. But go in and explain your situation to the banker, give them a look at your history, and see what they can do for you.

 

Pay Bills On Time

Either set up automatic payments for your rent and utilities or make sure you have reminder alerts in your phone and calendar. Paying any of these bills late (even if it’s just the once) could have a detrimental affect on your credit score. And it can take up to seven years to fix if you’ve made a few of those errors and paid up a couple of days late.

Rent

Depending on how you pay your rent, you can have it count towards your US credit history. If you pay online, look for a check box or tab where you can give permission for your rent to be counted. Otherwise talk to your landlord.

Car Lease

If you’re unable to get a loan for a car, consider leasing one. I haven’t done this myself so I can’t report back on the value for money etc. However, you can through companies such as International AutoSource, which specialise in cars for expats who don’t have credit history. All of your payments are reported to US credit history companies and all contribute to your score.

American Express

I’m putting this one last because I’ve only heard about it in passing so I can’t back it 100 per cent. Get yourself an American Express card in Australia (or wherever you’re from) a few months before you move to the US. Make sure you pay it off on time and try to pay it in full. When you move to the US, you’ll be able to switch that American Express Australia account to a US one.

Those are my tips on building your US credit history. Now tell me your experiences! 


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21 thoughts on “Building your US credit history

  1. I'm American, and I really appreciated the refresher on how your credit score is calculated! I'd forgotten that bank-issued cards are better than store-issued ones. Thanks for sharing – your post is very helpful!

  2. I never even considered the idea that my credit history would not "transfer" to another country! Thanks for the tips; I wonder if the American Express transfer works out of the U.S. into another country as well?

  3. It's really annoying right? Although, I suppose it is nice to have a clean slate if your previous history wasn't so rosy.
    I would imagine the American Express transfer would work elsewhere, but your best bet would be to check with them. Thanks for visiting Micki!

  4. This is a useful post as to how to build your credit rating and history up. I know in the states this is a complicated process but this step by step guide simplifies it.

  5. This is something a lot of people don’t think of when moving to another country. It doors limit what you can get without credit. Interesting you can switch Australian American Express to US account.

    1. Nice work Donna, you obviously had the lowdown! I didn’t find this info when I moved over here, so hopefully more people take this route.

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