Developing Credit History
Whether born in America or a newcomer to the land of opportunity, we're
all looking for ways to fulfill the American Dream. But one thing's for
certain: without a good credit history, the dream may be hard to reach.
For anyone in pursuit of life, liberty and happiness, credit is a fundamental prerequisite, especially when it comes to buying a car
or home. This is why new residents of America need to begin establishing credit history as soon as they settle in and find employment.
Unfortunately, getting credit is not always easy. Many U.S. creditors
may be wary of lending to newcomers, who are considered a high credit risk
Nevertheless, if you're planning to live permanently in America, you're
eventually going to need credit, probably sooner rather than later. The easiest
way to establish credit and a credit history is by setting up a checking account at a bank
and obtaining a secured credit card. The bank faces no financial risk
because these cards are backed by your own money (typically $500, which earns
no interest). Once you demonstrate that you pay your bills responsibly each
month, the bank most likely will increase your credit limit and offer
you a non-secured card.
There are some pitfalls to secured cards. Beware of scams that ask for up-front
fees or have most of the balance charged to the card as security. Unless the
issuer of the secured card reports your payment history to the credit
, a secured card is useless for establishing a credit history. Interest
rates can also be very high on secured cards.
If you belong to a credit union, you can deposit money in an account and then
take out a loan. Because they are non-profit institutions that serve specific
groups of people, credit unions often have more flexible lending guidelines
than commercial banks.