Author Topic: Just moved to the US - how do we optimize our credit score?  (Read 1811 times)

Corporate Coconut

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Just moved to the US - how do we optimize our credit score?
« on: October 20, 2016, 12:10:40 PM »
Dear Mustachians,

My husband and I just moved to New York City from Singapore and we have a credit card with HSBC with at $10k credit limit.

Any suggestions on how we best approach building a good credit score for the future?

Thanks in advance!

Mother Fussbudget

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Re: Just moved to the US - how do we optimize our credit score?
« Reply #1 on: October 20, 2016, 12:42:51 PM »
Welcome to the USA!  (don't forget to change your location in your profile settings)

The best way to increase your credit score is to use your credit card, and pay off the balance in full each month.

onlykelsey

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Re: Just moved to the US - how do we optimize our credit score?
« Reply #2 on: October 20, 2016, 12:49:08 PM »
Dear Mustachians,

My husband and I just moved to New York City from Singapore and we have a credit card with HSBC with at $10k credit limit.

Any suggestions on how we best approach building a good credit score for the future?

Thanks in advance!

I'm no expert on building your score, but you get three free credit reports a year (one from each major bureau) at www.annualcreditreport.com .  Start a schedule where you pull from Equifax in December, Transunion in April and Experian in August (or whatever works for you) so you can be on top of any false information that's on there that might blow up your score as you're building it.

Bracken_Joy

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Re: Just moved to the US - how do we optimize our credit score?
« Reply #3 on: October 20, 2016, 12:54:35 PM »
Welcome to the US =)

Nerd wallet to the rescue: https://www.nerdwallet.com/blog/finance/how-to-build-credit/ In particular, having your rent payment history be reported and becoming an authorized user on someone else's card are frequently overlooked options. But be aware of costs associated- if you don't *need* your credit soon, there isn't any point to pay to build credit. With good habits, time will take care of that.

In short,
-use your credit card and pay it off monthly
-try to keep at least 3% of the limit going through each month ($300), but no more than 35% ($3,500). These are the oft-cited figures I see, but the actual math used by the companies is totally hidden, so they're just guidelines
-until the year before you plan on using your credit (ex, to buy a house) consider opening 1-2 new credit cards each year. This will increase your total number of accounts, and decrease the percent% utilized of your available credit. However, it also reduces the average AGE of your accounts and results in "hard pulls", so it will reduce your credit score somewhat. Hence the recommendation you stop with ample time before using your credit for a large loan.

Djeayzonne

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Re: Just moved to the US - how do we optimize our credit score?
« Reply #4 on: October 20, 2016, 01:23:59 PM »
Try very hard never to let total utilization go over 20%.
Total number of accounts and average age of all accounts are also important, so open them up now and let them sit.
20+ accounts with an average age of at least 5 years while keeping utilization below 10% and you are golden.

However, accounts should not all only be credit cards.
« Last Edit: October 20, 2016, 01:28:08 PM by Djeayzonne »

MrSal

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Re: Just moved to the US - how do we optimize our credit score?
« Reply #5 on: October 21, 2016, 03:37:05 PM »
I just did my 2nd anniversary coming to the US... Like you, I had no credit history whatsoever...

I did a couple things that nowadays enables me to have a 790 credit score and this score has been with me since pretty much 6 months in!

First thing, I added myself to the oldest credit card of my wife - about 5 years old. Right after I opened a Discover Credit card with 500 dollars limit - they were the only ones to let me open an account myself at the time right off the bat. Sure the limit was low but in the meantime it was an account - as a point of reference my CL now with their card is 10,000

I added myself to other cards my wife had, be it Target Card or some other... I opened myself a store card as well under my name.

I let it flow for 3 months, after 3 months and seeing my score in the 740s I started churning CCs for miles... I opened 3 cards myself and my wife about 5. I added myself as AU all times in order to take advantage of her Credit Limits which were much higher than mine.

Even though you should be below 10% of credit utilization, its not a big deal if you go over it. Credit utilization ratio has no memory, so, your score may drop a lot if you max out a card for example, but once your statement comes and you pay it off it goes back up - it happened to me last summer where I went over the limit with my AMEX and my score went from 740s to 670s ... once I paid off I came back to 740s.

Also I have opened a Personal Line of Credit at a bank ... and also a HELOC diversifying my credit types.

As of now, I am sitting at 790 credit score

Paul der Krake

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Re: Just moved to the US - how do we optimize our credit score?
« Reply #6 on: October 22, 2016, 06:33:43 PM »
It takes an incredible amount of work to screw up your credit score when you always pay on time.

Pay your card on time. Apply for a another one in 6 months. In 18 months you will have a score of 750+ and wonder what the fuss is all about.