I recently relocated to the US from the UK. My credit profile is something I have spent the last five years rebuilding. But that stands for nothing in the US, so I faced a challenge. Despite being born in the US, and holding dual-citizenship, I have no credit history because I have lived all of my adult life in the UK. For all intents and purposes, I am unknown in the US and that, as far as the credit agencies, unions, and banks are concerned, means I am a risk. They cannot verify who I am.
I undertook these steps five steps to establish credit. Here are my recommendations:
1. Get an address
Before I could obtain a bank account, I had to secure an address. In order to secure an address, I needed to prove who I am. My landlord asked me to file a Cozy Credit Report, which I did. As anticipated, the credit agencies (there are three major credit reporting agencies in the US: Equifax, Experian and TransUnion) couldn't identify me. For this eventuality, I brought my UK credit report with me, which I downloaded before I left. I also verified my standing with references from previous landlords, banks and personal references.
2. Get a social security number
While not essential, it will help. Credit agencies can use other identifiers, but most lenders will require one in order to check your credit. For more information, click here.
3. Open a bank account
While the banks don't do a hard pull of your information from credit agencies, unless you are applying for a line of credit, this is a step in verifying your identity. That relationship will be filed with a credit agency.
4. Get a secured credit card
The most effective means of influencing your credit history, or FICO score, is obtaining a line of credit and having a responsible relationship with it. The only way to do this, as a person with no credit history, is obtaining a secured credit card. This is a card that you secure with a deposit ($400 in my case), which you can then use as a line of credit. More information of secured cards here. It is imperative that you repay the balance in full each month, and aim to only use around 30% of the available balance.
5. Obtain a credit builder loan
The purpose of a builder loan is to help you build credit. The money is typically held until the loan is repaid in full. This information is reported to the credit agencies. The loans can be obtained through credit unions or community banks. For more information, click here.
The most important factor in establishing a good credit is paying your bills on time and acting responsibly with money. If you do, you can expect your score to improve within 6-12 months. You can check it regularly with a credit agency, link here. For more information about how credit scores are calculated, click here.
