Foreign Real Estate Buyers: 5 Useful Tips to Build Your Credit Score!
The most popular option for foreign buyers when buying house in US has been to pay with cash. The next option is that they can wait until they build credit until they buy their own home.
The term Credit has several meanings. In our context here we are referring to that you are using someone else money for a purpose of your own. Credit score is a reflection of how well you can manage your credit responsibly.
Before a bank can offer you loan or credit, they need to make sure you are not a risk of the money they loaned to you. They look at your past history in regards to your ability to pay and whether you have been making payments on time as you promised. In other words they check your creditworthiness before they extend a loan to you.
So It is obvious that maintaining a good credit score make sense and is necessary when you are or planning to get a loan or mortgage for buying a house, for example.
If you are new in this country and/or have always dealt in cash in all your transactions, you will have no credit history. The credit bureaus keep track your re-payment activities and other data related to your debts to determine your credit score. This score, as mentioned before, is an indicator on how good and responsible you are when it comes to pay your bills and racking up debts. This score called FICO score is looked at by banks and other entities before they decide to extend credit or loan to you. A score of 700 and above is considered a good score. But it depends on the each bank policy.
Even though there are many ways to build your credit score, I would like to share with you some of the things that I have learned and followed which helped me to build and keep my credit score in a high acceptable level:
1) Open up a bank account in your locality or online.
2) Obtain a secured credit card from that bank. Once you opened up an account, discuss with your banker and obtain a credit card which will be supported by your own money in your account in that bank. This will be a secured credit card linked to your bank account. Banks will have no problem issuing you a credit card because it is supported with your own money. Or, you can have someone else co-sign for your credit card
3) Pay on Time. Once you received the credit card, create some charges using the credit card. And set up auto withdrawal from your bank account to your credit card account so your monthly payment will automatically taken care of on time so it won’t get delayed. Make sure you pay the card balance in full every single payment. This process is going to start building credit history in your name.
4) Manage Your Credit Card accounts Responsibly: Pay off your balances right away. Credit card companies charge interest on unpaid balances
5) Don’t Open Too Many Accounts. Rapid multiple account opening can trigger to look risky in the eyes of the lenders. Also it can affect your credit score in a negative way.
Having a basic credit card and gradually building your credit history in that is the best way to do it, provided you CAN closely track and manage your credit card activities. Banks definitely check how well you manage your debt and timely payments. If you don’t manage it correctly you easily will end up in a financial disaster. Your credit managing ability is very critical.
Be fore-warned that if you don’t use and treat credit cards responsibly, within no time you will be up to your neck and above with credit card debts. Racking up on credit card charges on unnecessary items without thinking the consequences is an easy recipe for destroying your credit score.
Credit cards have become a necessary tool nowadays especially now since so many vendors and businesses stopped accepting checks and big dollar bills. Credit cards are convenient but if you are not careful it can easily get you into trouble.
Don’t use the credit card unless you know for sure you will able to and you will pay off the debt timely without fail every single month. You may be one single day late, but that still can easily affect adversely on your credit score.
Hiring the right realtor or other professionals can make all the difference when it comes to handling home buying situations.
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