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Aussies in NYC: Guide to getting a credit score

Prepare to start from scratch if you're new to the country.

Updated

There are a few hard truths you learn when making the move from Australia to New York, but one of the toughest is this: You almost always need a good credit rating to sign a lease, get a credit card, and even a phone plan–and it can take a year and a half to build one once you land in the U.S. Add to that the fact a low credit score is almost impossible to escape–and will even mean paying a much higher interest rate on future loans–and you’ll understand why everyone needs to get this right from the second they touch down in America.

Navigating the world of credit scores and reports is tricky, and it only takes one wrong move (or one missed credit card payment) to damage your rating. That’s why I posed all the tough questions to an expert: Kalpesh Kapdia, CEO of SelfScore, a company that helps people access credit, and establish their credit history using alternative metrics and data. Sure, it’s not the sexiest subject in the world, but it’s damn important. Alright rookies, let’s do this.

How do I find out what my score is?

Reading and understanding a credit report is a crucial part of this education. Let’s say you’ve requested your first credit report from one of the major credit bureaus—Equifax, Experian,TransUnion, or Innovis. Each of these bureaus uses different reporting schedules and may not include parts of your credit history such as recently closed accounts.

Although these are the major factors that contribute to your credit score, there’s other factors that influence your score that are completely out of your control.

Data indicated here is updated regularly
Name Product Starting price Trial period Credit scores Credit monitoring Credit reports Update frequency
Experian Credit Report
$19.99
30 days
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly, Annually
Get your credit report and FICO score for just $1 with enrollment in Experian CreditWorks credit monitoring. Cancel anytime.
TransUnion Credit Report
$24.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly
TransUnion credit score, monitoring and identity theft insurance.
myFICO
$19.95
1 day
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly
Get quarterly access to your most widely used FICO® Scores and a 3-bureau credit report.
Equifax Small Business Credit Reporting
$15.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly
Monitor your key business relationships to protect your company from losses.
GoFreeCredit.com
$19.95
7 days
TransUnion
Yes
TransUnion
Monthly
$1 for a seven-day trial to get access to your credit score and credit report from TransUnion.
Credit Karma
$0
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
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Compare up to 4 providers

Data indicated here is updated regularly
Name Product Monthly Fee BBB Rating Customer Support Cancel Anytime
Self Lender - Credit Builder Account
$25
A
Phone, Email, Online Chat
Yes
Save money and build credit with a secured-installment loan that you can access after 12 or 24 months.
CreditRepair.com
$99.95
F
Phone, Email, Mail
No
Specializes in clearing your credit report of inaccurate items with all three credit bureaus.
Lexington Law Credit Repair
$89.95
F
Phone, Email
Yes
Law firm that offers three tiers of credit repair suited to your situation.
Credit Firm Professional Credit Repair
Credit Firm Professional Credit Repair
$49.99
A+
Phone, Email, Mail
Yes
Professional credit repair service that can help you create a step by step action plan. Cancel anytime.
The Credit People
$79
C
Phone, Email, Mail
Yes
Professionals work with you to clean up your credit and raise your credit scores. Cancel anytime.
Sky Blue Credit
$79
C-
Phone, Email, Mail
Yes
Free credit report and monitoring that comes with a 90-day money-back guarantee.
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Compare up to 4 providers

If I have a good credit score in another country like Australia or the U.K., will that impact my credit score in the U.S.?

Credit scores are not portable across geographies as each country’s credit system works in different ways and banks generally do not recognize your credit history in another country even if it is a same bank.

How long will it take to build a good credit score?

It typically takes 12-18 months.

As a new American resident, are there any shortcuts to building a good score?

Aussies in NYC: Guide to getting a credit score

Pay on time–every on-time payment is in your favor, so make at least the minimum payment or pay off your balance in full. Also, calculate 20 percent of your credit limit across all your open cards and make sure you stay below that number. This plus your payment history equals 65 percent of your score.

You should never close out old cards [because] the longer you’ve been using credit, the higher your score. Plus, the greater your credit variety–including credit cards, loans, and other forms of financing–the better. It’s just a small influencer, but an easy one to improve. However, opening too many new lines of credit in a short period lowers your score, but makes up only 10% of your score, so it’s not a huge influencer.

What is the first thing every foreign worker should do when moving to the U.S. on a working visa to start building their credit rating?

They should first get an SSN (Social Security Number) by filling out an SSN application. Then you can take their application along with their employment authorization document and go to their local Social Security Administration office.

Afterward, they should go to their local bank and open a checking or savings account.

To open a bank account in the U.S. with most banks you need:
  • Your current Passport
  • another form of ID
  • immigration form (I-797)
  • a document that verifies your mailing address
  • money to deposit into the account.

They can also ask the bank for a credit card application.

There are a number of credit builder card options available such as
  • SelfScore Mastercard
  • Discover It
  • CITI Thank You Preferred

Each of these provide a good way to start building their credit history.

What is considered a good credit rating?

You create good credit by borrowing money and paying it back promptly. Some U.S. citizens borrow money in the form of loans for large purchases, in addition to using credit cards. By demonstrating that you can pay back money that you borrow, in small or large amounts, you’re establishing good credit, which is reflected by your credit score.

Here’s how banks and landlords read your credit score as a grade:

  • 580 OR LOWER: F
  • 580-619: D
  • 620-679: C
  • 680-719: B
  • 720 OR HIGHER: A

Ideally, you want a score of 680 or higher. Once you’ve started using your credit card for six months check with your bank to find out the status of your US credit.

What exactly should I be looking for on a credit report?

Here are the five major things below and how to fix them if necessary.

  1. Personal information:
    These are sometimes out of date depending on the information available at the time the credit report was compiled. If you see outdated info on one of your credit reports, simply inform your creditors of the change and they’ll send the info to credit bureaus themselves. But don’t worry–outdated personal info doesn’t negatively affect your report.
  2. Credit lines:
    Information about your open lines of credit must be accurate to properly reflect you. Review the payment history, credit limit, and balances to make sure they are correctly represented on your report. You also want to make sure that all of the credit lines and accounts are ones that YOU opened. It’s possible someone with the same name as you opened an account that was mistakenly attributed to you. It also may be that someone stole your identity and sought credit under your name.If that happens, make sure to set up a fraud alert with the credit bureau displaying the suspected fraudulent account. It’s free of charge and creditors will know to reach out to you directly about any future attempts to open credit under your name.
  3. Collection accounts:
    If your debt was ever sent to collections, that account was likely passed around to multiple sources. In most cases, this will be attributed to a single account but it’s possible that each assignment of the account will be listed separately. Confirm that the information is up to date on each of these collections accounts.
  4. Credit inquiries
    Each time you seek credit, a lender will make an inquiry into your credit report. Too many of these “hard inquiries” negatively affect your score, especially if you have a short credit history. When seeking credit, focus your search for loans and other cards inside the same 45-day window to minimize the impact on your score.
  5. Public records:
    Although less common for most credit holders, financial matters of public record such as foreclosures and bankruptcies can have a dramatic negative influence on your credit report. However they will both be removed from your record after seven years. If any of this information remains on your report after that time, you can dispute it with your credit bureau by submitting evidence of your claim.

What are some of the most common mistakes people make when trying to build their credit score?

  • First, it starts with using your full legal name in financial documents. This ensures your financial information ends up in your credit report and is reflected accurately.
  • Second, owning too many credit cards and/or department store cards. Getting discounts and offers might be tempting, but having access to too much credit may be detrimental to your credit score. Even if you don’t use the cards, potential creditors may worry that you won’t be able to repay a new obligation if you decide to use all that credit. Plus all those enquires into your credit report may indicate to lenders that you are having financial troubles or are on the verge of getting too deeply into debt.
  • Third, maxing out your credit on a single card can hurt your credit score, and finally; keeping your address current with all your creditors is also very important.

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