Building credit history and getting approval for you first credit card might not be an easy task. As you will understand after few months in the US, credit score is queen and cash is king in the US.
If you plan to stay in the US after you graduation, we highly encourage you to think about a strategy on how you plan to build your credit history. In this article, we would give you few tips that can help to build a better credit score, improve your history and navigate you in the complicated credit system in the US.
As an anecdote and illustration, after two years at the states and after graduation from a top MBA school, we still got denied from top tier credit cards (even thought we had high salaries and low debt). This is because we didn’t know and followed the tips that are mentioned in this article.
Locate the branch of one of the big banks next to your school.
- Prior to choosing the bank, ask other international students and Alums where they got approved for credit card
- If you got denied for the credit card, it is not over yet and you have 30 days to call the credit card reconsideration line and to talk your way to get approved
University Financial Institution
Many schools as their own financial institution to help students to get credit cards and bank accounts. For instance, MIT Sloan students can use the services of the MIT FCU (federal credit union) to get approved for a credit card. Yet, we heard stories that those cards are not counted towards you credit score thus we suggest you to check it with the credit bureau.
Secured Credit Card
If you didn’t got approved for a credit card in the methods mentioned above, the next step is to get a secured credit card. In this card, you pay in advance your credit limit to the credit company (usually $200-500 in the beginning). Now just use card and pay it every month. The advantages of this system are that your transactions are reported to the major credit bureaus. Furthermore, after paying your card for 6 month, the card will transform to a regular credit card with higher credit limits.
Finance a car
Getting a loan and paying it in full shows the credit company that you are a good user. Thus, buying a car with a loan is one way to show them and to build a positive credit history. As a result, if you plan to buy a car (and even if you have all the money in cash), it is good to buy it with financing (preferably from bank or a known institution) and pay the monthly payments on time.
Authorized user mean that you have someone else card on your name and the he allows you to use it. As a result, you benefit from a credit history for the period you are an authorized user and usually 3 months after starting being an authorized user you will get an offers for your own credit card.
It is hard to find someone that will agree that you will be is authorized user unless it is family or really close friend.
Few credit cards and banks that operate globally will allow you to open a new card in the US if you had an account with them in a different country. Few examples are most of the Canadian banks and American Express.
Apply for Card When Needed
Applying for a credit card and getting rejected can hurt your credit score. Thus, once you have a credit card the rule of thumb is to wait 6 months before applying for you next credit card. Meanwhile and also after it, you can always call the bank and ask for credit increase. Just make sure it doesn’t require any credit check on your files.
If you made it until here, we hope that you manage get your credit card. Now that you got your credit card it is important to follow simple rules to keep your credit score higher and higher:
- Pay the card in full and on time
- Use your card every month but don’t use more than 20-30% of your credit limit
- Check you credit score and reports
If you have any other great tips on how to build a credit score as an international student please comment below or share with us the information. Looking forward to hear about all your Chase Sapphire Reserve experiences!