Establishing Credit

WHAT IS CREDIT?



Credit is the sum of money someone loans to another person expecting that the money will be repaid with interest. You can establish good credit by using a credit card responsibly.

What is a credit score?



Your credit score (FICO) is a number used by credit reporting agencies to represent your credit history. It is important to have a good credit score so you can buy a house or car in the future. When you apply for a loan or a credit card, creditors will request a copy of your credit report which includes your credit score. Your history of how you pay your bills (credit score) is recorded by a credit reporting agency

Personal Credit History



Credit history is a record of a consumer's ability to repay debts and demonstrated responsibility in repaying debts. A consumer's credit history consists of information such as: number and types of credit accounts, how long each account has been open, amounts owed, amount of available credit used, whether bills are paid on time, and number of recent credit inquiries. It also contains information regarding whether the consumer has any bankruptcies, liens, judgments or collections. This information is all contained on a consumer's credit report.

Potential creditors, such as mortgage lenders and credit card companies, use the information in a consumer's credit history to decide whether to extend credit to that consumer. This information is also used to calculate the consumer's FICO score.

Building Credit in the United States


Credit history usually applies to only one country. Even within the same credit card network, information is not shared between different countries. For example, if a person has been living in Canada for many years and then moves to the United States, when they apply for credit cards or a mortgage in the U.S., they would usually not be approved because of a lack of credit history, even if they had an excellent credit rating in their home country and even if they had a very high salary in their home country.

An immigrant must establish a credit history from scratch in the new country. Therefore, it is usually very difficult for immigrants to obtain credit cards and mortgages until after they have worked in the new country with a stable income for several years.

Tra

nsferring Credit Accounts


Some credit card companies (e.g. American Express) can transfer credit cards from one country to another and in this way help start a credit history.


What Do I have to have in order to get a credit card?



1. Personal information such as date of birth, home address, and telephone number
2. A regular income
3. A good record of paying your bills on time

Credit Cards can be expensive! Understand the fees you have to pay for your credit card. Some credit cards require an annual fee.

IMPORTANT THINGS TO KNOW



Do not apply for every credit card application you receive. This will have a negative impact on your credit score. Keep your credit card balances low. High balances will have a negative impact on
your credit score. You should try to pay your balance in full.

Important Words to Know:



Annual Percentage Rating (APR)- The APR is a measure of the cost of credit expressed as a yearly interest rate. Usually, the lower the APR, the better. Be sure to check the fine print to see if your offer has a time limit. Your APR could be much higher after the initial limited offer.
  • Balance- Amount of money you have to spend.
  • Billing Cycle- The time between the dates your payments are due.
  • Credit Report- Your credit history written in a report. This document will be used by
  • creditors to determine if they want to give you a line of credit.
  • Credit Reporting Agency- The agency that compiles information on how you pay your bills and how much debt you have.
  • Credit Score (FICO)- A number used by credit reporting agencies to represent your credit history.
  • Debt- The amount of money you owe to creditors.
  • Late fee- A fee charged for paying your monthly fee late.
  • Minimum Amount Due- Refers to the least amount you have to pay to keep your credit in good standing. You will find this on your monthly credit card statement.
  • Statement- A document showing credits and debits made on an account., sent to you monthly.

You can order your credit report from the following credit reporting agencies:



Equifax
PO Box 105873
Atlanta, GA 30348
800-685-1111

Experian
PO Box 2002
Allen, TX 75013
Consumer Credit Questions
888-EXPERIAN (888-397-3742)

TransUnion
Post Office Box 2000
Chester, PA 19022
(800) 888-4213

What is my IOM Travel Loan?



The United States Government issues interest free travel loans to refugees migrating to the United States. The International Organization for Migration (IOM) administers the loan. Good repayment of your IOM loan will help you get credit! Not repaying your IOM loan will result in a negative credit score which will make it harder to get credit.

What is my responsibility to this loan? Before you came to the U.S., you signed a promissory note Agreeing to pay back your loan. It is your responsibility to repay the total amount of your loan in regular monthly payments. Your first statement will be sent to you three months after you have been in the
United States. Your monthly payment is to be received by the 10th of each month.