Establishing Credit (Quickly?)

[chaine1 116]

Hi all,

I just wanted to report something that may be of interest/help to new immigrants trying to establish credit.

My husband and I (the USC) arrived back in the USA in late July of this year (we both were living abroad in a third country). I am back in school as a PhD student, and my husband has thankfully found reasonable employment (not as good as hoped, but still very happy he found something very quickly).

Pretty soon after arriving, we started trying to establish credit for my husband - we got him a secured credit card, and I added him as an authorized user on one of my credit cards.

We are interested in buying a house, but assumed we were pretty much out of luck, with me earning pittance as a grad student, and my husband with no credit. However, we decided to meet with a loan officer just to get an idea of our options, and what we should do to insure we could be in a house within a few years.

The loan officer decided to run credit score checks on both of us, and to everyone's surprise, my husband's score came back as a 690 (about average). In looking at the report, the loan officer said the only reason he scored as high as he did is because I added him as an authorized user on my account.

I had no idea that doing so would influence his score so much. In fact, I was under the assumption that this would have a very small to no effect. But low and behold, after only being in the USA for 2 and a half months, he is scoring high enough to qualify for a home loan.

I know this may not work for everyone, but I wanted to share our experience, in case it is able to help others out. We were both quite surprised by this development.

Good luck to everyone!

[reese1 68]

Thanks for sharing this. I was wondering about the same thing.

[Sirdaniel42 86]

Thank you so much for sharing

[codygrace 14]

Thanks for the info. I was actually coming here to ask questions on credit. I have really good credit in Canada. My fiance has no credit in the United States. He didn't file for taxes one year and had a state lien placed on him. Of course he paid up, and the lien has been "released." But, that means nothing because now he has no credit and nobody will lend to him. He was even denied a secured credit card. Assuming nobody will ever pull my credit from Canada to the States. What do we do? I want to be able to buy a house, and do things loans would allow me to do. I'm actually very frustrated over this.

[ca_babe 129]

Thanks for the info. I was actually coming here to ask questions on credit. I have really good credit in Canada. My fiance has no credit in the United States. He didn't file for taxes one year and had a state lien placed on him. Of course he paid up, and the lien has been "released." But, that means nothing because now he has no credit and nobody will lend to him. He was even denied a secured credit card. Assuming nobody will ever pull my credit from Canada to the States. What do we do? I want to be able to buy a house, and do things loans would allow me to do. I'm actually very frustrated over this.

Does your fiance have a job? If he doesn't then he can't open a new credit card until he has his independent income due to the CARD act.

http://www.mint.com/blog/credit/card-act-stay-at-home-mom-01172011/

This article has suggestions on how to get a credit card.

http://www.mint.com/blog/credit/credit-card-income-01242011/

[chaine1 116]

I have really good credit in Canada. My fiance has no credit in the United States.

I don't know anything about tax liens, so I can't help you in that regard. However, one loan officer we did speak with told us there are ways to do an 'alternative credit check' for my husband. She said it would involve things like rental histories, etc. We didn't pursue it further, because housing has been provided for us for the last 5 years (so no rental history). I don't know, but as a Canadian, there might be some options for you.

If this is really something you want to pursue, I'd suggest start talking to loan officers. You'll need to find someone more knowledge than the average loan officer though. We spoke to three before finding one who gave us some answers that made sense.

Good Luck!

[codygrace 14]

He does have a decent job.. And that's a good link, but he doesn't have anybody who will put him on an authorized account and he can't get any credit on his own and applying for more will probably just be hurting him more. Nobody would co-sign for him either since nobody would agree to co-sponsor me. Normally I am on the ball and I would know how to help him with this, but after he got declined for a secured credit card, I'm clueless. He's mailed the credit bureaus to show that he's in good standing with his taxes now, but this might be a dead end too. Sigh.

[ca_babe 129]

... and applying for more will probably just be hurting him more.

I think not applying for more will hurt him more than not applying at all. Even if he takes a credit score hit but eventually succeeds in finding a secured credit card, if he pays it on time and doesn't use more than 10% of the credit limit, then he'll increase his credit score this way. I've opened 4 credit cards within one month timeframe because of the initial bonus points. I got $3000 worth of travel tickets for opening them. My credit score only went down by 5 points.

[codygrace 14]

Hmm. What bank is likely to give secured credit to him with his bad credit?

[ca_babe 129]

Hmm. What bank is likely to give secured credit to him with his bad credit?

Look for the secured credit card.

http://www.creditcards.com/bad-credit.php

One more thing, it used to be that carrying a balance and paying at least the minimum amount due increases your credit score faster than paying your bill in full monthly because it showed the creditors that you can be a "responsible" borrower. Lenders used to make more money from borrowers who carry a balance because of the interest. If you miss a payment, they make even more by increasing your interest rate substantially. Unlike those people who don't carry a balance, lenders only make money from them through merchant fees. However, after the Card Act was passed, it limited the number of ways that lenders can make money off those people who carry a balance. They also became more cautious because of the recent recession, most people aren't able to pay off their loans. This has changed how lenders value their borrowers. Those who have high income and who pay off their credit card in full monthly are now more valuable because of low risk of default and lenders can make money off the merchant fees. High income people tends to spend high amount as well.

This article talks about the highly coveted group.

http://online.wsj.com/article/SB10001424052702303812904577295452897188314.html

Good luck!

[chaine1 116]

Hmm. What bank is likely to give secured credit to him with his bad credit?

My husband's secured card is with Capital One.

A conversation with a tax attorney might be useful. Or it might just take time until he is eligible for a credit card. How long ago was the lien released?

[codygrace 14]

His lien was released January 2010 by the looks of it. This is so frustrating for me because I've never been one to default on anything, and I always have my income taxes in well before the deadline! I'm happy that he is responsible now, but of course his credit past is haunting him!

[bigdog 376]

Hi all,

I just wanted to report something that may be of interest/help to new immigrants trying to establish credit.

My husband and I (the USC) arrived back in the USA in late July of this year (we both were living abroad in a third country). I am back in school as a PhD student, and my husband has thankfully found reasonable employment (not as good as hoped, but still very happy he found something very quickly).

Pretty soon after arriving, we started trying to establish credit for my husband - we got him a secured credit card, and I added him as an authorized user on one of my credit cards.

We are interested in buying a house, but assumed we were pretty much out of luck, with me earning pittance as a grad student, and my husband with no credit. However, we decided to meet with a loan officer just to get an idea of our options, and what we should do to insure we could be in a house within a few years.

The loan officer decided to run credit score checks on both of us, and to everyone's surprise, my husband's score came back as a 690 (about average). In looking at the report, the loan officer said the only reason he scored as high as he did is because I added him as an authorized user on my account.

I had no idea that doing so would influence his score so much. In fact, I was under the assumption that this would have a very small to no effect. But low and behold, after only being in the USA for 2 and a half months, he is scoring high enough to qualify for a home loan.

I know this may not work for everyone, but I wanted to share our experience, in case it is able to help others out. We were both quite surprised by this development.

Good luck to everyone!

:thumbs:

[ca_babe 129]

His lien was released January 2010 by the looks of it. This is so frustrating for me because I've never been one to default on anything, and I always have my income taxes in well before the deadline! I'm happy that he is responsible now, but of course his credit past is haunting him!

Jan 2010 is almost 3 years ago. Have you checked his credit report yet and make sure that there are no outstanding loans aside from the tax lien? You can also use this time to save up at least 30% down payment for a house while building his/your credit history. Having an excellent credit score is not as important as having a substantial down payment and high income. It's actually very hard to get a loan if you have less than 20% down payment.

[chaine1 116]

It's actually very hard to get a loan if you have less than 20% down payment

We are putting down 10% with no issues. It is better to put 20% down, because then you won't have the mortgage insurance, but it certainly hasn't been an issue for us that we are not putting down 20%. Not to mention, FHA loans only require 3.5% down.

Have you checked his credit report yet and make sure that there are no outstanding loans aside from the tax lien?

Ditto. You/He need to order a copy of his credit score and have a closer look at it.