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|How New Immigrants Establish Their Credit
In the United States, it is very important for new immigrants to have a good credit record, because it will affect all aspects of your future life.
"Credit" is very specific, if there is no good credit, not only can not get preferential interest rates, but also may not be able to get loans.
So, what important factors will affect our personal credit score?
How can we accumulate credit score accordingly?
In the United States, 90% of the lending institutions use FICO credit scoring system.
FICO credit scoring generally ranges from 300 to 850.
FICO scoring consists of five parts, namely:
1. Payment history, accounting for 35%.
It reflects whether the previous loans have been repaid in time.
So the most important thing is not to be in debt.
If you really don't have the money to repay, you need to go through the right process of filing for bankruptcy or repaying the loan with collateral.
But the impact is considerable, and these records will be with you for 7 to 10 years.
I'm afraid no bank will dare to issue you credit cards and lend you money in the next 7 to 10 years, and your prospective employer will see these records.
2. Amounts owed, accounting for 30%.
Generally speaking, it depends on the ratio of the amount you owe to the credit limit.
The higher the credit limit, the smaller the credit utilization rate.
Generally speaking, the utilization rate of credit line is an important index to measure the amount of arrears.
The general utilization rate is the best below 10%.
But if the usage rate is zero, the score will be lower, which means you are not using the credit card at all.
If you just got your first credit card and the quota is very low, how can you reduce the usage rate?
In fact, as long as the monthly statement closing date before repaying a large part of the arrears, the final monthly statement balance will be very low, of course, with the credit score will soon increase.
3. Credi thistory (15%) The longer the credit record is, the higher the credit score will be.
This includes the average length of all your cards, as well as the length of your oldest carD.Xiaobian wants to tell you a little tips here.
Generally speaking, unless you have to cancel your first credit card, it will shorten the length of your credit history and reduce the credit limit, which will lead to an increase in the utilization rate of credit limit.
4. The types of credit used account for 10%.
Your credit cards, car loans, consumer installments, financial accounts, mortgages are all considereD.Newcomers begin their daily expenses by using credit cards in large quantities, and gradually have car loans and housing loans, which naturally leads to higher scores.
Nor is it necessary to borrow in order to improve credit scores.
5. New credit accounts account for 10%.
Every time you apply for a new credit card or loan, the bank or the lender inquires about your credit report from the credit institution in order to evaluate whether to borrow from you.
This is called hard pull.
Hard pull records will only be kept for two years.
The number of hard pulls means you need more money (at least the banks think so), so hard pulls lower credit scores.
But this deduction is only temporary, and it will gradually rise back.
So if you don't need big loans in the next few months, it's worth losing those points in order to improve the credit line, a more important indicator.
Soft pull, which corresponds to Hard pull, refers to other credit report queries unrelated to borrowing.
For example, they query their own credit reports, credit card companies in order to send advertisements to find potential customers and so on.
Soft pull does not affect credit scores.
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