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| A Credit Card Is More Then A Simple Plastic Card We can help you to establish your credit history (get a credit card) based on your Social Security Number (SSN) regardless of your immigration status. It goes without saying that having a credit card (individual or business) makes life much easier in the United States. If you do not have a tax number (ITIN) we can help you to get one. If you need more information please contact us. How much do you know about your credit score? That three-digit number is tied inseparably to our financial lives, yet many young adults haven't given it the attention it deserves. Your score can play a role in your ability to rent an apartment, qualify for a loan or even get a job. It can also affect how much you'll pay on interest charges, insurance and even cell phone contracts. Building a stellar score a priority while you're young and you could actually save hundreds or thousands of dollars over your lifetime. However, if you don't take your credit seriously, a bad score -- or even a nonexistent score -- will cost you.
Who's keeping score?
Your credit score is basically used to predict the possibility that you won't pay your bills. Scores are compiled by Fair Isaac Corp. and are sometimes called FICO scores. The top possible number is 850, but topping 800 is probably unrealistic. A median score usually falls in the 720-to-725 range, meaning half of consumers fall above that point, half below. Even if you haven't given your FICO score much thought, there are plenty of others who have or will, so you'll want to aim for the mid-700s to make the best impression on:
1. Lenders. This group is the one most people associate with their credit score. Having a good rating can help you qualify for the best rates on a mortgage, car loan, credit card and even a small business loan if you've got that entrepreneurial spirit. A nonexistent score can make it impossible for you to qualify for a loan or credit card at all.
2. Insurers. The majority of auto insurance companies use your credit score when determining your rates, and the practice is also common among home insurers. A recent survey by Consumer Reports among eight popular auto insurers found that drivers with top scores could pay up to 31% more on their premiums than if credit scoring wasn't factored in, while those with bad scores would pay as much as 143% less.
3. Landlords. Increasingly, you may need a good credit score to rent an apartment. Landlords view your credit rating as a measure of your responsibility to pay bills on time. If your rating is below par or you don't have a credit score yet, you may have to find a friend or relative to co-sign your lease, or you could be required to pay a higher rent or security deposit.
4. Employers. When you're applying for a job, potential employers can pull your credit report as long as they notify you first. And, in fact, about 35% of them do, according to the Society for Human Resource Management. Why? Bad credit can be a signal of irresponsibility, or employers might be worried you'll spend more time fretting about your financial woes than concentrating on the job.
5. Cell Phone Carriers. Even cell phone service providers may check your credit before signing you up for a plan. They want to make sure you're responsible and will pay your bill each month. Some utility providers may pull your report as well. If you have credit issues, you may not qualify for the best plan rates, you could be required to pay a deposit, or you could get turned down.
True cost of your score
So, how much does your credit score affect your finances? Say we have two friends, Jim and Mark. Both took steps right out of college to start building a credit report by getting their first credit cards and an auto loan. Jim made all his payments on time, never maxed out his credit cards and often paid more than the minimum required. Mark, however, frequently paid late, overextended his cards and applied for new credit to bail him out of his mismanaged debts.
Now both are ready to buy homes, and they each apply for a $250,000 30-year mortgage. Through Jim's responsibility, he's been able to build a score of 750, qualifying him for a loan with a 6.2% interest rate, according to Fair Isaac, the scoring bureau. Mark's score comes in around 650, netting him a rate at 7.3% interest. Jim's monthly mortgage payment is $1,536 while Mark pays $1,718 -- a difference of $182 per month. If they both live in their homes for 10 years before selling or refinancing, Mark will pay $21,840 more in monthly payments than his friend. Ouch.Mark also gets burned on a new auto loan -- paying $1,332 more over three years on a $20,000 loan than Jim. Plus, Mark probably paid much more for his car insurance than Jim.
How to get started
Even if you don't plan on applying for a loan or getting a new apartment or a new insurance policy anytime soon, it's a good idea to start building your credit score now so it's there when you need it. If you're already out of school, or you don't trust yourself with a full-fledged credit card yet, a secured card will help you get off on the right foot. This card allows you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit. The issuer takes on zero risk because if you don't pay on time, it can dip into your account to cover the bill. Most issuers require a deposit of $300 to $5,000. You build a history just as fast with a secured card as with a regular one. And after making payments on time for a year with a secured card, you should have an adequate history to switch to an unsecured card and get your deposit back.
Boost your score
Knowing what goes into your credit score can help you manage your debts well. Here's how to make the best impression on your credit history:
Pay on time. 35% of your score depends on your payment history.
Don't max out your cards. 30% of your score is based on how much you owe. You want to keep your "credit utilization" ratio -- the percentage of your credit limit that you've actually used -- no higher than 30% of your available credit limit.
Start while you're young. 15% depends on the average age of your accounts.
Avoid opening several accounts at once. Not only will this lower the average age of your accounts, but lenders will worry that you might go on a borrowing binge. 10% of your score depends on new credit.
Get the right kind of credit. This accounts for the final 10% of your score. Your experience with revolving credit, such as credit cards, on which you control how much you charge and pay off each month, carries more weight than installment debt, such as car loans and mortgages, with fixed payments. But don't simply stock up on a pocketful of Visas -- lenders like to see that your money skills are well rounded.
All Americans are entitled to free credit reports every year from each of the three major credit bureaus. The credit reports used to cost as much as $9.50 each.
The three major credit-reporting agencies, Equifax, TransUnion and Experian, are each required to provide consumers, upon request, a free copy of their credit report once every 12 months.
The reports will not be sent automatically. Each consumer must request reports one of these three ways: Go to AnnualCreditReport.com, which is the only authorized source for consumers to access their annual credit report online for free.
What's the catch? You can order all three credit reports at one time, or at different times throughout the year. It's your choice. But be sure to order from the centralized agency. If you go directly to the credit-reporting agencies, you will be charged unless you fit other criteria for a free report. The new ruling doesn't replace the other ways to receive a free credit report. You're still entitled to a free credit report if: you've been denied a loan, insurance policy or job based on your credit report; you're applying for unemployment or receive public assistance; or you currently reside in a state that already offers free credit reports from each credit-reporting agency (Colorado, Georgia, Maine, Massachusetts, Maryland, New Jersey and Vermont).
Watch for typos
You can access your information online at www.AnnualCreditReport.com, but if you don't get the Web address exactly right or if you search for terms such as "free credit report," you could get sucked in and scammed by one of the many credit report "impostors" currently inhabiting cyber-world. The trio of reporting agencies established a single authorized Web source for customers to access the information for free: www.AnnualCreditReport.com. That is the only federally mandated source for free, no-strings-attached credit reports. The rest of the Internet Web sites advertising "free" reports -- more than 100 at last count -- are in fact impostors whose real agenda is to steer unsuspecting consumers into a for-profit marketing enterprise, according to a World Privacy Forum in-depth investigation and report. Dozens of the confusing sites are operated by Experian, Equifax and TransUnion, the big three bureaus who together run the government-mandated and authorized free-report site. In other words, while they run one Web site jointly that offers free reports, they're also running dozens of other sites -- often under different names -- that charge for the same or additional services.
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