From Our Free-Lance Correspondent

If you plan to remain in the U.S. for a while, you will want to begin establishing a good credit history as soon as possible. As an alien in this country, it is not always easy to begin this process. Slowly and a little at a time is usually the best way to start.

Once you have a bank account (see our article on Basic Banking), you may be eligible to apply for a charge card or a credit card. A charge card (such as American Express) requires that the balance be paid in full each month. A credit card (such as MasterCard, Visa, and American Express Optima) allows you the option to pay a small amount on your balance over a longer period of time and charges you interest on your balance. Even using a card once a month to buy something small and paying the total balance off immediately will begin to show that you can be considered a “good risk” when the time comes to make a major purchase and you need a bank loan or mortgage.

As a new immigrant, if you are turned down for a credit card it is likely due to a lack of information on your credit report. You may try applying for a card at a major department store or a mail order catalog company. If you are a student and have no, or little income, you may not qualify for any of these cards. Watch the areas on your campus where notices and advertisements are posted for students. The major credit card companies send application forms to colleges to be posted specifically for students. These cards allow only a comparatively small credit limit, but they do not expect applicants to have an established credit history, and for that reason it is easier to qualify. Once you begin to use the card and to pay it off responsibly, you will quickly begin to build your good credit history.

A word of warning :  Do not be seduced into using your credit card unwisely. Interest rates on these cards are usually very high once you have gone beyond the low introductory APR (annual percentage rate) and when used without restraint, one can end up deep in serious debt very quickly.

Other important things to keep in mind in building your credit report history is to pay your bills on time. Medical expenses, utilities, rent or mortgage payments, car payments, credit cards -- all of these should be paid by their due dates. If they are not, you may find your credit history marred. This can effect your attempts to rent an apartment, to buy a car or a home, or to have utilities services begun. These negative entries will be accessible to any lender or service provider requesting your credit history and may stay on your report for as long as seven years.

There are three major sources where lenders check your credit history. These are: Equifax, Trans Union, and Experian (formerly TRW). These are companies make their profit by compiling the information on you from all of the creditors and lenders who request reports and selling it back to them. We recommend that you write, call or fax for a copy of your credit history once a year from at least two of them. One copy of your credit history per year can usually be obtained without a charge. A copy of your report may also be obtainable on line. These reports will show any credit cards you have, the limits on the cards, your payment history, any loans you have taken out, any court dealings (such as divorce, liens and bankruptcy -- all of which are considered negative in reviewing a credit application and will remain on your report for about ten years), current and previous home addresses and places of employment. If there is erroneous information on the report, you should have it corrected. If there are omissions you should attempt to have these additions made. Having corrections made is often time-consuming and frustrating. Depending upon the change you seek to have made, the finance reporting companies will sometimes refuse the information coming directly from you. You may need to then contact your bank or lender, employer or landlord -- whoever can officially provide the additional or corrected data. Make every effort to have an accurate, clean credit record on file.

One note of interest :  You may have ruled out buying a home because of a tarnished or unproven credit history. The home you seek to buy is usually considered excellent collateral for the lender, however, and -- while you may be turned down for  minor applications by comparison -- you could find that a mortgage company is most willing to lend you money to buy a home. 

In the Rules of Financial Credit :

1. Do your research. Comparison shop for the best deal AND know which companies are requesting information about you and what they are finding out.
2. Be responsible. Don’t live by credit. Don’t take on more in mortgage or car payments than you can really afford. Don’t make a habit of using one credit card to pay on the balance of another.
3. Don’t make assumptions. Rather than presume you don’t qualify for something, make the application and find out. If you are turned down. Find out why.

No one else is looking out for your best interest. Be sure that you are!