The Mysterious Credit Score

How does the credit score actually work – if you are just moving to the US?

In the United States, a credit score is a number based on a statistical analysis of a person’s credit files, which in theory represents the creditworthiness of that person, which is the likelihood that people will pay their bills.

A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax.

Income is not considered by the major credit bureaus when calculating a credit score.  Seems daft to be honest!

The reality is, it is very hard to buy anything on credit the first 2-3 years you live in the US.  Of course, if you have cash, then you can buy anything, but not many immigrants can afford to or have saved enough cash to buy a car.

There’s only one real way to earn and grow your credit score, and that involves debt.  You need to find a way to get a store credit card, make small purchases, and pay off the debt monthly – just the minimum payments.

The interest rates on these cards are insane, so make sure you do not go overboard and increase too much debt.  Keep the purchases small and pay the debt off quickly.

You will see how quick these monthly payments impact your credit score.  before you know it, you’ve gone from a negative 100 to 45-500.  Still not good enough, but you are moving in the right direction.

A close friend of the family suggested that we get 2-3 credit cards.  The more debt we have, and paying it off, will increase the credit score faster.  You have to know how to play the game to beat it.

If you are planning to move to the US, for personal or business reasons, make sure that you have enough cash to sustain you for at least 3-6 months, on top of your salary.

Why?  Well, if you move from Europe to the US, you have to replace all your appliance and tech gadgets, as the voltage is not the same.  Some computers just need a new cable or adapter, but TVs, fridges, kitchen appliances, etc. will not work.

It took as roughly 3 years to get a good solid (not great) credit score.  By the 4th year is was good (high) enough for us to buy a house.

I’ll happy to take questions or personal messages if anybody has any questions in regard to immigrating to the US and starting over.  It is not easy.

However, the American dream is fully alive and if you take the chances, then you will do very well here.  It is the land of opportunities, and we love it here.  We are now proud American citizens.

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