How to quickly and effectively build credit?

[Pat2021 43]

What's the best way to build credit quickly and effectively?

 

My sponsor has been out of the country with me for 5+ years so she also doesn't have great standing, though her TransUnion score seems to have been kept intact and is quite good. For some reason she has no Experian score though?

 

I got approved for Amex through my UK credit history but I'm aware it's not super widely accepted.

I also keep reading that the more credit cards you have, the better - is that true?

 

For now I'm thinking my Amex with my wife as authorized user, and for her a SoFi with me as an authorized user, to boost our scores.

 

But is that enough? Should we get more credit cards, even though we won't use them? Is there more we can do?

 

Thank you.

[Chancy 6,233]

*** Moved from Moving to the US forum to Tax & Finances During US Immigration, where similar topics are discussed ***

 

7 minutes ago, Pat2021 said:

What's the best way to build credit quickly and effectively?

 

 

[African Zealot 1,452]

1 hour ago, Pat2021 said:

I also keep reading that the more credit cards you have, the better - is that true?

 

But is that enough? Should we get more credit cards, even though we won't use them? Is there more we can do?

I have 18 credit cards with total limits a little north of $600k and average credit score across the three bureaus of 836. However that is not normal and although it hasn’t hurt me, I don’t recommend it.

 

One or two Visa, one Mastercard, and one Amex making four is enough.

Edited January 20, 2023 by African Zealot

[Pat2021 43]

7 minutes ago, African Zealot said:

I have 18 credit cards with total limits a little north of $600k and average credit score across the three bureaus of 836. However that is not normal and although it hasn’t hurt me, I don’t recommend it.

 

One or two Visa, one Mastercard, and one Amex making four is enough.

Thank you. Do you recommend that per person or between the two of us with the other as authorized user?

[African Zealot 1,452]

2 hours ago, Pat2021 said:

Thank you. Do you recommend that per person or between the two of us with the other as authorized user?

My recommendation is per person. Yes you’re married and intertwine your finances and will add the other as an authorized user etc however I also believe your credit should be great even as a standalone individual.

 

However I am a little confused. I hope you’re aware once you hit around 760, higher scores generally don’t give you better rates?

 

https://www.cnbc.com/2018/10/09/going-higher-than-this-credit-score-is-a-waste-of-time-expert-says.html

 

If you got approved for an AMEX you’re likely in the 700’s and most likely above 720 and your scores will increase with responsible use (keeping utilization low and no late incidents) and time, so you don’t need “gimmicks” of being added as authorized user to another person’s card to boost your score.

 

What are you trying to achieve the credit boost for in the short term, maybe that will help me advise you? 

Edited January 21, 2023 by African Zealot

[Pat2021 43]

19 minutes ago, African Zealot said:

My recommendation is per person. Yes you’re married and intertwine your finances and will add the other as an authorized user etc however I also believe your credit should be great even as a standalone individual.

 

However I am a little confused. I hope you’re aware once you hit around 760, higher scores generally don’t give you better rates?

 

https://www.cnbc.com/2018/10/09/going-higher-than-this-credit-score-is-a-waste-of-time-expert-says.html

 

If you got approved for an AMEX you’re likely in the 700’s and most likely above 720 and your scores will increase with responsible use (keeping utilization low and no late incidents) and time, so you don’t need “gimmicks” of being added as authorized user to another person’s card to boost your score.

 

What are you trying to achieve the credit boost for in the short term, maybe that will help me advise you? 

I only got approved for the Amex due to my UK credit history, via Nova. My US credit is currently non-existent, I don't even have the SSN delivered yet.

 

I want to increase our credit rating so that we can get a car, a house, etc. in the near future.

 

Very valid points about good standalone credit - but an authorized user also receives a credit boost for it, right?

[African Zealot 1,452]

2 minutes ago, Pat2021 said:

I only got approved for the Amex due to my UK credit history, via Nova. My US credit is currently non-existent, I don't even have the SSN delivered yet.

 

I want to increase our credit rating so that we can get a car, a house, etc. in the near future.

 

Very valid points about good standalone credit - but an authorized user also receives a credit boost for it, right?

Gotcha! Well then my advice is use the Amex for anything and everything for the next six months or so then apply for another card or two from different issuers preferably on the same day. Your strategy should be to build your credit limit fast. With diligence you can be approved after about a year. If you need a vehicle before then you may need a co-signer.

 

Why doesn’t your spouse have an Experian score? It’s not fatal though because most creditors pull your score from only one or two bureaus. There’s a list floating online of which creditor uses which bureaus so you know which to apply for. Capital One is one of the few that pulls from all the bureaus for each credit application.

 

You may want to read up on credit from the various credit dedicated websites/forums outside VJ. 

[Pat2021 43]

6 minutes ago, African Zealot said:

Gotcha! Well then my advice is use the Amex for anything and everything for the next six months or so then apply for another card or two from different issuers preferably on the same day. Your strategy should be to build your credit limit fast. With diligence you can be approved after about a year. If you need a vehicle before then you may need a co-signer.

 

Why doesn’t your spouse have an Experian score? It’s not fatal though because most creditors pull your score from only one or two bureaus. There’s a list floating online of which creditor uses which bureaus so you know which to apply for. Capital One is one of the few that pulls from all the bureaus for each credit application.

 

You may want to read up on credit from the various credit dedicated websites/forums outside VJ. 

Thank you that's great advice. My spouse was living with me abroad the last 6 years and so had nothing reporting to the bureaus either. But because she maintained an account with a credit union, they approved her for a CC as well, so she'll have that and I'll be an authorized user on it 😊

[Letspaintcookies 2,208]

Talk to your bank about a credit building loan. You only apply for a small sum, like $1000 or $2000. The money goes into a special account that you can't touch and you pay it back in automated small installments over a year or so. Every payment will get you a positive report and you have an actual loan history. While credit cards are good to boost your score, the score alone is not enough to get a good loan since lenders want to see your experience with a variety things. 

[JeanneAdil 6,203]

credit is based on debt-to-income ratio

so if you have several credit cards (even if nothing is owed, they look at the amount allowed on the card) compared to income

you need at least a year  of US income to have a credit score , good payment history on rent helps

 

 

1. rent or mortgage instead of credit cards

2. buying a car as it is collateral (if u can' buy when 1st in US,  u probably can lease 

 

Your income and employment history are good indicators of your ability to repay outstanding debt. Income amount, stability, and type of income may all be considered. The ratio of your current and any new debt as compared to your before-tax income, known as debt-to-income ratio (DTI), may be evaluated.

[African Zealot 1,452]

1 hour ago, JeanneAdil said:

credit is based on debt-to-income ratio

The amount of loan you’re extended is affected by your income however Credit score has absolutely nothing to do with income.

 

However when you’re purchasing a house or vehicle they will check your income and debt to income ratios.

[Pat2021 43]

 

12 hours ago, Letspaintcookies said:

Talk to your bank about a credit building loan. You only apply for a small sum, like $1000 or $2000. The money goes into a special account that you can't touch and you pay it back in automated small installments over a year or so. Every payment will get you a positive report and you have an actual loan history. While credit cards are good to boost your score, the score alone is not enough to get a good loan since lenders want to see your experience with a variety things. 

Hmm I see but it feels weird taking out a loan for a small sum that I can easily afford and pay interest on it to the bank just so they pat me on the back and say "well done, here's a few points towards your credit"?

[OldUser 4,833]

On 1/20/2023 at 1:04 PM, Pat2021 said:

Should we get more credit cards, even though we won't use them? Is there more we can do?

Some people have portfolios of cards for various scenarios:

 

- Card for restaurants & supermarkets

- Card for travel expenses

- Catch all non-category spend card

 

Those can be either cash back or reward points based.

 

It really makes difference whether you're getting 1% or 5% back on some category.

 

For example, someone paying $1000 a month on supermarkets can get $50 a month back VS $10 back depending which card is used for the purchase.

 

Not much you can do other than having 2-4 credit lines and paying them on time, keeping credit utilization under 30% (the lower the better). Building credit takes time, in 2-3 years of responsible use you'll see credit score going to upper 700s.

 

800+ score usually requires long credit history (7+ years) and usually not helpful anyway as creditors give best rates at 760+ already. 

 

There is a shortcut which is asking somebody with long and excellent credit history to add you as an authorized user... It doesn't work for all card issuers, but some of them start reporting that excellent history to credit bureaus as if it was yours. Obviously, it's almost impossible to pull off unless it's you helping your kid in the future.

Edited January 22, 2023 by OldUser

[Letspaintcookies 2,208]

6 hours ago, Pat2021 said:

 

Hmm I see but it feels weird taking out a loan for a small sum that I can easily afford and pay interest on it to the bank just so they pat me on the back and say "well done, here's a few points towards your credit"?

But that's how it works. I mean nobody is forcing you to do it but you'll end up with shitty interest rates when you take out loans for cars or a house and that's simply because you have no history that shows how you handle a loan.

Like I said, it's not just about the credit score.

Edited January 22, 2023 by Letspaintcookies

[JeanneAdil 6,203]

7 hours ago, Pat2021 said:

 

Hmm I see but it feels weird taking out a loan for a small sum that I can easily afford and pay interest on it to the bank just so they pat me on the back and say "well done, here's a few points towards your credit"?

how small is small

loans at least u know the interest rate

 

from hater of credit cards I have one for a well known home improvement center

i stupidly used it 

$900 owed / monthly statement said i had to pay $29 and first month i paid $50

they added $20 for interest 

OMG  if i paid 29 and they add 20 ,  this would never be paid off

 

so,  i paid the whole bill the 2nd month

 

i think we should all have one open card for real emergencies but more than 5 hurts your credit