What is Credit Score?

One of the first things you will hear about in the United States is something called a Credit Score. Think of a credit score like a Trust Number. It is a grade that businesses use to see how much they can trust you with money. What is it exactly? In your home country, people might trust you because they know your family or your reputation. In the U.S., businesses do not know you personally. Instead, they look at a three-digit number between 300 and 850. High Number (700+): We trust you very much. Low Number (Under 600): We are worried you might not pay us back. Why does it matter to you? Even if you have cash in your pocket, a low score (or no score at all) can make life difficult. You need a good score to: Rent an apartment: Landlords check this to see if you will pay rent on time. Buy a car: A good score gets you a lower interest rate (the extra fee you pay to the bank). Get a phone plan: Some companies will not give you a contract without a score. Utilities: It can help you get electricity or water set up without paying a big deposit first. How do you get a score? When you first arrive, you are Credit Invisible. This means you do not have a bad score; you simply do not have one at all. To build one, you need to show you can handle borrowed money. Payment History (35 percent of your score): This is the most important part. Always pay your bills on time. Even one late payment can hurt your score. Amount You Owe (30 percent of your score): If you have a credit card with a 1,000 dollar limit, try not to spend more than 300 dollars at one time. Important Tip for Newcomers Your credit history from your home country does not follow you to the U.S. You are starting from zero. A good way to start is by getting a Secured Credit Card. You give the bank a small deposit (like 200 dollars), and they give you a card to use. As you pay it back every month, your Trust Number starts to grow!