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Tuesday, May 12, 2015

Establishing Credit History - An Important Thing

If you are in USA then you have to understand the importance of establishing your credit history. I have seen many students here that do not apply for credit cards even after living here for a while. Of course you have to have a job first ( part time or full time) to get your social security number and then you can apply for credit cards.



In US , everyone's credit history is linked to their SSN ( Social Security Number) . Credit history reveals a lot of things about you. It reveals if you are a dependent borrower or not . It basically reveals your patterns of taking loans or credit. If you pay on time then you will establish a good credit history . If you are a defaulter and don't pay on time then there might be a derogatory mark on your credit report. If you have a credit card I would suggest you to pay in full every month within the deadline. This will help you establish healthy credit history.

If you have a bad credit history ( lots of derogatory remarks because of your late payments or other reasons) or no credit history , then you may not be able to apply for any loan. Also you may have problems getting a phone connection , leasing an apartment, getting electricity connections etc.

Lenders will always check your credit history before they lend you some money. If you have a good credit history then say getting an approval for a loan or new credit card is easy.

If you are denied a credit card , don't apply again for it the very next day . This will affect your credit history. Wait for a while and of course if you are denied credit , then the creditor will provide you with a written explanation why they denied your credit request. Also don't apply for a lot of credit cards. Depending on bank to bank the credit inquires on your credit history can be "hard" or "soft" . If the credit inquiry is soft it will not bring your credit score down much . But if you have a hard inquiry than your credit score might plummet down.

Opening a bank account is also important . Open tallest one checking and one savings account. This is one of the first things you should do after you land here in USA. Opening bank accounts does not help you in establishing your credit history . But they are important because lenders can view them to see how well you manage your money.Also bank statements can be used as address proof which will help you in the long run.

Also its always good to get an apartment, utilities, electricity etc. In your name.Try to pay bills on time.

There are specially designed student credit cards by some financial institutions. They have less credit limit but it helps you in establishing your credit history. Try getting one of these and after a few months apply for a regular credit card.

Also usually most of the credit cards give you cash back . So you get something back when you spend which is not the case when you make a purchase with your debit card. Therefore I believe its a win win situation . One- It is helping you in building your credit history and  two it is also giving you cashback.

I hope the above information helps. If you have something to add to it , do leave a comment below . Don't forget to like our facebook page for latest updates. Also follow us on Twitter.

You would also want to read my article : How to Save Money in US

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