U.S. Credit 101 for U.S. Immigrants
When moving to the U.S., it is important to know the ins and outs of how credit scores work and how much they affect life for citizens and immigrants residing in the country. Your credit score is a number that is calculated to determine how likely individuals are to repay debts acquired in their lifetime.
Companies, especially banks or lenders, use credit scores to decide whether or not they will provide an individual with a credit line, a loan, a financing agreement, etc. Because immigrants may not have credit within the U.S., American Express has made it easy to get a credit card and begin building financial history. Using this information, as well as the information provided on websites like Nova Credit, you can choose the best credit card to build your score from zero and enjoy the United States at its fullest.
What Is Part of Your Credit Score?
Your credit score is the calculated number that helps lenders determine how likely you are to pay back debts. Let’s discuss what encompasses your credit score so that you know exactly what is causing your score to be lower or higher based on your activities.
Payment history
Payment history accounts for almost half of your credit score, making it a very important factor to consider. Late payments lower your score, so many people automate payments to avoid missing due dates and decreasing their credit score.
Credit utilization
Credit utilization looks at how much of a credit line is actively being used. For example, a credit card with a $1,000 limit that has $500 available would be at 50% utilization. It is recommended that utilization be kept low, ideally at or below 30%, to have a positive impact on credit scores.
Credit history
Credit history is the amount of time your credit has been active; it makes up about 15% of your score. Credit history cannot be changed, you will have to simply wait for time to pass and the history to build. You can, however, help your credit history by starting to build your credit as soon as possible.
Types of credit for Beginners & Immigrants
Having several different types of credit on your account is a good thing. Lenders like seeing diversity that shows how well individuals can handle multiple payments. However, you should start off small and avoid having to make too many payments to different lenders.
Best Credit Card for Beginners & Immigrants
Now that you have a thorough understanding of the factors that go into calculating those three incredibly important numbers, let’s take a look at some of the credit card options available for immigrants entering the U.S. with the goal of settling into the country and building a good credit score.
Hilton Honors American Express Card
The Hilton Honors American Express Card comes with no annual or foreign exchange fees. This makes travel easier and reduces the amount of money lost while travelling abroad. Card holders can earn bonus points for all eligible purchases, giving you more value for every dollar spent. You also receive complimentary silver status, which gives you more perks and makes building your credit as hassle-free as possible. Especially if you plan on staying in resorts or hotels affiliated with the Hilton Honors program.
Blue Cash Everyday Card
The American Express Blue Cash Everyday Card is another option available to immigrants that allows them to work towards a good credit score. This card has no annual fees and 0% APR for 15 months, giving you some time before interest starts accruing. Most everyday purchases will earn a percentage cash back, including trips to the grocery store or gas station stops. Users can earn cash back which they can use towards different rewards and prize options.
While these two options are a good start, there are plenty more choices that may or may not be beneficial to building a solid credit history. Now that you have a bit more information about credit scores and what these numbers represent, you can enter the U.S. with in-depth knowledge about what your score is as well as what factors influence your credit and what options you have when it comes to getting a credit card in the U.S.
