This is because a credit is a service that allows people to access a monetary loan or an asset on the condition that a full subsequent payment will be made.
How does credit work in the United States?
Anyone who has had the need to make a loan or apply for a bank credit, rent or buy a house or access an asset that requires credit, then surely you have heard about credit history.
In the United States, the importance of having a credit history to access practically any good or service is emphasized, and that is why there is a special system in which several factors are taken into account to determine how reliable a person is to pay a loan or credit.
Why you need to develop a credit history in the United States
Why is credit history important? This is a fundamental step in the adult life of people, since it is a record in which the ability of a person to meet payments and debts is evidenced. To count on it, the individual must demonstrate their financial responsibility by paying all their debts on time.
By covering all their payments on time, each movement is recorded in a credit report that has the purpose of detailing all the types of credits that the person has requested and in how long they have been fully covered.
About credit reports and scores in the United States
It is possible to find several ways to verify that a person is trustworthy when acquiring a debt; One way to do this is through credit reports and credit scores, a system that supports consumers’ financial movements.
A credit report is a thorough breakdown of your credit history, usually prepared specifically by a credit bureau. For its part, the credit report accurately reports how the credit has been managed to determine if the consumer has been responsible enough to pay off all your debts.
How to start making credit in the United States
1 Apply for an SSN or ITIN
If you have plans to acquire a good or request a service through a loan, it is very important to start nurturing a credit report and history as soon as possible. Regardless of immigration status, everyone in the territory must pay taxes.
This means that they will also have access, through their social security number (SSN) or taxpayer personal identification number (ITIN), to create a credit history.
2 Open a bank account
Opening a bank account will be one of the first steps in building a good credit history. While it is true that some movements do not generate a score, keeping a good record will be the difference between granting a credit.
For example, if a user opens a bank account, but, in addition to making withdrawals, he has reports of overdrafts or lack of payments in his bank account, then he will generate negative points.
3 Check that you have income
How to prove to a financial institution that you have income? There are different options for people to check their income and be eligible to acquire a loan, regardless of the type of job they have.
This can be done through the payroll receipt, a record of tax payments or the bank statement of a user’s credit card, where it can be verified that the user has sufficient funds to cover a debt.
4 Start with a secured credit card
A secured card is an excellent option to apply for credit or to ensure that you maintain a favorable credit history. This option allows you to pay the financial institution an agreed amount to cover all expenses in case you run out of funds to cover your debt.
This is especially useful when people lose a job or face unforeseen circumstances that prevent them from continuing to make their credit card payments.
5 Apply for a builder loan
In addition to the above options, consumers also have the facility to build a credit history, in case they haven’t had the opportunity to do so before.
The “builder loansDo not require a favorable credit report or prior approval; However, the financial institution in charge of its issuance must verify that the consumer has sufficient funds to guarantee the payments derived from this service.
6 Add an authorized user with good credit history
A credit account having two users as the main responsible offers different benefits; In this case, if one of the people involved has a better credit history than the other, the payment capacity demonstrated by the first will be taken into account.
Thus, adding an authorized user with a good credit history could be a great incentive to improve credit history more quickly and access more credit without major setbacks.
7 Pay your mortgage on time
Mortgages are usually one of the main reasons why a person improves their credit history, and this is because it is a monthly payment that takes place over a long period of time.
This allows the bank to observe a pattern in the timeliness of payments and determine if a person has not only the resources to cover a debt, but also the punctuality to do so within the agreed term.
8 Make sure your rent payment is reported
If you pay rent, don’t forget to make sure that each of your payments is reported to the financial institutions in charge of creating your credit history. This requires an important verification step that the landlord must carry out with the institutions.
However, this can be a crucial step for the tenant, especially if the tenant does not yet have a record. In recent years, experts have determined that the rent payment report has been positive to generate a favorable credit report.
9 Ask for a personal loan
There are five main reasons why a personal loan could be the answer to positively nurturing a credit history. First of all, because it allows a payment history to be recorded, which is one of the most important steps for financial institutions to determine how suitable a person is to obtain credit.
Also, a personal loan is useful because financial institutions take into account the amount of money that a person owes; If a person is managed properly, they will be able to cover this debt and improve their credit scores.
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