“You can’t take it with you,” is an American saying that means money and worldly possessions are left behind when you pass on — they don’t follow you into death. Sadly, the same often applies to your credit history when you move to the U.S.
For decades, newcomers to America have learned this the hard way. Arriving with virtually no American financial history, it can be next to impossible to get a credit card, an apartment lease, a mortgage, or even a car. Without an American credit history, you’ll potentially pay thousands of extra dollars in security deposits and interest rates, since lenders — including cell phone providers, and gas and electricity companies — have no way of knowing how financially stable and trustworthy you may be.
How to build credit in the U.S.
Getting a good score requires persistence and patience. It is very possible though with a few behavioral changes. One of the most important behaviors might sound simple but is really important — paying your bills on time. Having a long history of on-time payments is good for your credit score. A single late payment won't destroy your chances of a good score. Unfortunately, it will take months to recover from it.
Another important behavior is to keep credit balances low. For example, if you have a new credit card with a $4,000 limit and you make $2,000 worth of purchases, you'll have a 50% utilization rate on that card. Your overall utilization rate on your revolving credit accounts (such as credit cards) is an important scoring factor. Keeping your utilization rate as low as possible, while still using your accounts, is best for your scores.
Closing accounts can decrease your available credit, which may increase your utilization rate and hurt your scores, so keep your credit cards and accounts open. Unless you’re usually overspending, try not to close accounts.
Submitting new credit applications can lead to something called hard inquiries, which may temporarily decrease your credit scores. Therefore, it’s usually best to only apply for a new account if you have a reason to take out a loan or apply for a new credit card.
Although getting a good credit score is very much possible, it often takes years to establish a credit history in the U.S., and building an excellent score that gets you the best interest rates isn’t easy. The average FICO score (Fair Isaac Corporation, a popular model for credit scoring) in the U.S. in 2017 was 700 — that ranks as “good” by FICO’s standards, below “very good” and “exceptional.” The highest possible score is an 850, but once you have a score of 800 or higher (or even above 780 in some cases), you may be in the excellent score range and creditors could offer you the best available interest rates and terms on a new account.
How to transfer your credit history from your home country to the U.S.
Building a good credit score in America takes time. It is absolutely achievable through diligent effort, but this is not ideal if you need access to certain financial products right away and have recently moved to the U.S.
There is possibly another option: if you are new to the U.S. and want to apply for financial products, you may be able to transfer your credit history from your previous country of residence using Nova Credit. Nova Credit is plugged into the top global consumer credit bureaus to bring your credit to the U.S. for use by American lenders, property rental companies, and others. Essentially Nova Credit moves credit reports from countries like Mexico, India, Australia, and others into equivalent reports for U.S. lenders. That allows you to use your international credit file to apply for U.S. loans, apartments, and more. Effectively, Nova Credit serves as an enabler to connect you with lenders, so they can serve a new customer segment — you!
Getting started is easy. You can simply visit the marketplace to see which credit cards you can apply to using your international credit history. Nova is soon launching with partners across student loans, car loans, apartment rentals, and more. Let them know what you're looking for and get notified when it goes live.
Credit is very important in America
For better or worse, credit will continue to be very important in the U.S.A. This is sometimes surprising to newcomers, but it has a direct impact on the types of products you can access, on the apartment you live in, and even on your ability to get certain jobs. Most directly, good credit can save you a lot of money over your lifetime! Whether you build your American credit history over time or use your international credit profile to apply for financial products, it is vital to understand the importance of credit.
