You are probably asking yourself: “Why do I need a good credit score?”
But at some point you will find an opportunity and you may not be able to access it because you do not have a good credit score. For example, what if you need to rent a car or apply for a loan or credit card to finance your business? You will find that your credit score is low and lenders will not actually allow you to borrow money or offer you lower terms and rates. You will miss out on opportunities that will help you grow your business. At the same time, knowing, how to build credit in the USA can save you thousands of dollars on a car loan or other options, such as credit cards. A good credit score can add up to thousands of dollars in interest rate savings on long-term loans.
What do credit scores mean?
These credit scores determine how viable your profile is to receive a new loan.
- Poor credit (from 300 to 579 points): This credit score table does not allow you to be a creditor of the financing instruments.
- Regular (from 580 to 669 points): It will allow you to qualify for more financing without these being the best.
- Good (from 670 to 739 points): It is the standard, where the credits are accessible and the interest rates can be low.
- Exceptional (800 to 850 points): A credit score of more than 800 points is considered the best.
Each one also determines the type of interest and the magnitude of the savings that you can have when acquiring loans.
Where can I get my free credit score?
By law, you can order one free credit score report a year from any of the three major bureaus in the United States: Equifax, Experian, and Transunion. Although you can purchase a report of your FICO score on myfico.com, more and more banks are offering this service for free. Bank of America, among others, takes advantage of its online banking to give you access to your score whenever you need it. There are also other sites, like Credit Karma or Credit Wise that allow you to open free accounts to check your credit score.
Where do credit scores originate?
The bureaus that we just mentioned (Equifax, Experian and Transunion), are in charge of calculating your credit score. Each one has a different mathematical formula to determine the digits of your score.
What information does this formula need to work?
Generally, it takes into account your history of direct debit payments or payment of services, your debts and everything you pay with credit cards. If you always pay your services and your cards before the cut-off date, your history and, therefore, your score, will improve a lot.
How is the credit score calculated in the USA?
The two main credit scores in the United States are Vantage Score and FICO.
Both are calculated with different formulas, but are based on very similar factors.
- Payment history: This is the most important factor, both in FICO (where it represents 35%).
- Debt-to-income ratio: This is an index of how good your financial decisions are. The most advisable thing is that your debt-income ratio does not exceed 30%.
- Length of credit history: The age of your lines of credit can help you have a better score.
- Extensive inquiries (hard pull): These inquiries can affect the credit score. That is, the more credits you request, the more your score will be affected (unless the credits offer a soft pull).
How to get quick credit in the USA
How to improve my credit score table as soon as possible and achieve a good score quickly?
Next, tips and techniques will be presented that will answer how to make credit in the US as quickly as possible and with the greatest number of points.
Report your rent
If you’re renting a property in the United States, chances are the property manager isn’t reporting your rental payments to the credit bureaus. For example, members of Camino Financial, when they begin reporting their rent, have experienced an increase in their credit scores of more than 50 points in a few weeks. The most important thing to achieve this is to be proactive when reporting your rent to the credit bureaus. On Experian you will find more information on how to report your rental.
Get a secured credit card
Are you wondering how to increase my credit in the USA? A credit card is a great option!
A secured credit card is not the same as a prepaid debit card. Which one suits you?
- A secured credit card is a card that requires a security deposit of about $200. Annual percentage rates range from 9.99% to 18.95%.
- If you already have a credit history, you can apply for an unsecured card, which does not require an initial deposit.