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Building Your Credit Score

Updated: Jul 3, 2020

A Credit Score is a numerical value that represents a person’s credit activities. This number is primarily based on a credit report from different credit bureaus.

As a new immigrant in USA, you need to start building your credit score because this will be helpful to you later in life.

You need to open a bank account with the bank of your choice. You might not be allowed to apply for a regular credit card at this point since you do not have enough credit history yet. What you can do is apply for a secured credit card, it is similar to a regular credit card but with very low credit limit. You can inquire with your bank about secured credit card.

Credit Scores ranges from 300 to 850. A good credit score is in the range of upper 700s. Having a good credit score will give you the ability to get a loan for a very low interest rate. This will be helpful later when you plan to buy a new home, a car or even start a business.

Factors affecting your Credit Score

35% - Payment History

Are you paying your bills on time? How many bills were paid late? How many were sent out to collection agents? The more recent, the worse it will be for your overall score.

30% - Outstanding Debt

How much do you owe on your car or home? How many credit cards do you have and how many are maxed out? Rule of thumb is keep credit card balances at 25% or less of their limits. Also, be mindful of your debt to income ratio.

15% - Length of Time of Your Credit History

The longer you have established your credit history, the better.

10% - New Credit

Your credit score takes a hit every time you inquire or apply for a new credit card or a loan.

10% - Types of Credit You Have

It will be helpful if you have different kinds of credit accounts like home loan, car loan, credit cards, etc.

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