# Credit rating...



## eleewhm (Mar 13, 2010)

I understand that for the US , credit ratings are look uponvery closely... as i am moving to the states soon , and the company will be giving me a lum sum for relocation benefits.

My Plan is to get a place to stay.. most probably a housing in the range of 300KUS.. but i am wondering .. would it make sense to pay up in full or to loan like 50K and repay in 5 yrs.. to get some sort of credit rating score...or i could also get a car and loan 5K and repay in a year to get a better rating...

sorry i am new.. and i did read up on some credit rating scoring info.. but it was no help...


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## Asian Spirit (Mar 1, 2010)

*Credit*



eleewhm said:


> I understand that for the US , credit ratings are look uponvery closely... as i am moving to the states soon , and the company will be giving me a lum sum for relocation benefits.
> 
> My Plan is to get a place to stay.. most probably a housing in the range of 300KUS.. but i am wondering .. would it make sense to pay up in full or to loan like 50K and repay in 5 yrs.. to get some sort of credit rating score...or i could also get a car and loan 5K and repay in a year to get a better rating...
> 
> sorry i am new.. and i did read up on some credit rating scoring info.. but it was no help...


Hi and welcome to the site,

The site here is kind of quiet for a day or two for the holiday weekend. I use to live (born and raised) in the states. But have been living out of the US for a number of years. So any info I may have for you would be quite old.

Let your post stay here for a few days and I'm sure you will get some positive feedback from members living in America as they return from vacation...


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## eleewhm (Mar 13, 2010)

sure.. thanks... i was just wondering.. if i first step foot into the states .. and i were to get a car with loan... with no background etc... how can i go about doing it... the company where i am working for is a big MNC.. i dun know if it helps if somesort of letter stating my salary etc.. would assist me in getting a loan to get me started...


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## Asian Spirit (Mar 1, 2010)

*Cars*



eleewhm said:


> sure.. thanks... i was just wondering.. if i first step foot into the states .. and i were to get a car with loan... with no background etc... how can i go about doing it... the company where i am working for is a big MNC.. i dun know if it helps if somesort of letter stating my salary etc.. would assist me in getting a loan to get me started...


In the states, a letter from someone will not help in loans for cars or most anything else. Everything goes through a finance company such as General Motors or even a small lending company. But all require a sizable down payment and established credit.

Depending on where in the states (mostly outside of California) one can find a junker used car for less than $1,000us and just pay cash for the old thing.

Its difficult to get established anywhere in the states. You need credit to get credit.
(Also, most big cities have public transportation such as busses available. Fairly easy to get around once you learn the route system.)

Glad I'm outa there. Hahaha...


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## Bevdeforges (Nov 16, 2007)

I'm also in the situation where I've been gone from the US for a number of years, but I do stay somewhat current with the situation over there.

Getting credit of any sort right now is pretty tough - especially if you're "just off the boat" (i.e. newly arrived). It normally takes a year or two to develop enough of a credit history to be considered a good loan candidate.

You'd probably be better off renting for the first year or so. As it is, you may be asked to "pre pay" your rent for some period of time (six months or a year) to convince the landlord of your credit worthiness without an established track record in the US. It may be possible to get your employer to co-sign your lease for the first year, which is another option.

If you're looking to pay cash, you may be better off doing so for the car (new or used) and then get a credit card with a modest credit limit (through your bank). Use that for the first year to make small but regular purchases, which you pay off each month. That should put you on the radar and get your credit history off to a good start.
Cheers,
Bev


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## Asian Spirit (Mar 1, 2010)

*Credit Cards etc*



Bevdeforges said:


> I'm also in the situation where I've been gone from the US for a number of years, but I do stay somewhat current with the situation over there.
> 
> Getting credit of any sort right now is pretty tough - especially if you're "just off the boat" (i.e. newly arrived). It normally takes a year or two to develop enough of a credit history to be considered a good loan candidate.
> 
> ...


Hi Bev,

Happy Easter over your way.
Ya know, after being out of the states for seven years I had forgotten all about the use of credit cards. Imagine that?

The last time we used a credit card was here in the Philippines right after I first arrived. We needed a new washing machine and my brain was still in the states. So down to the mall we went and bought that new thing with the Visa card. Got it home and started laughing about it because it never occured to us to just pay cash!
Right then and there we cut the card into pieces and havn't had or used credit since. Sure feels good to be debt free! Hahahaha...


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## Bevdeforges (Nov 16, 2007)

Gene and Viol said:


> Hi Bev,
> 
> Happy Easter over your way.
> Ya know, after being out of the states for seven years I had forgotten all about the use of credit cards. Imagine that?
> ...


Happy Easter to you, too. 

Having a credit history of some variety is pretty much a necessity in the US these days. I have been going back there a couple times a year and you can run into some strange situations if you don't have a credit card of some variety. Like, to rent a car or to book a hotel room.

But I've always been one to pay off the cards each month in full. Just as well, as that's how credit cards work here in France.

Now I hear that if you don't use your US credit card enough, they may come back and charge you an annual fee in order to keep the card. 

Nah, I don't miss those aspects of the US.
Cheers,
Bev


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## Fatbrit (May 8, 2008)

eleewhm said:


> I understand that for the US , credit ratings are look uponvery closely... as i am moving to the states soon , and the company will be giving me a lum sum for relocation benefits.
> 
> My Plan is to get a place to stay.. most probably a housing in the range of 300KUS.. but i am wondering .. would it make sense to pay up in full or to loan like 50K and repay in 5 yrs.. to get some sort of credit rating score...or i could also get a car and loan 5K and repay in a year to get a better rating...
> 
> sorry i am new.. and i did read up on some credit rating scoring info.. but it was no help...


A good credit history takes time -- don't try and rush it.

All loans are difficult at the moment, more so with no credit history. Basically you're looking at putting down half or more for any big purchase -- and even then you'll find it difficult

If you can get a "first-time buyers" loan for a vehicle, that's a great one to start your credit rolling. There's should be no pre-payment penalty with an auto loan, so ignore the terms and rate, but aim to pay it off in full in between 6 and 12 months. This will give you maximum credit boost for minimal interest cost.

A secured credit card is another good starter. Choose from one of the main villains like BoA, Chase or Wells/Wachy and just put $500 down on it. The rule then is to never have the account at more than 20% of the maximum, in this case $100. So use it to fill the gas tank on your car once or twice a month only. Pay off in full every time the bill arrives -- there are no extra points for paying interest. Play this game for 6 months and you'll have a fledgling credit score.


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## Fatbrit (May 8, 2008)

Bevdeforges said:


> Having a credit history of some variety is pretty much a necessity in the US these days. I have been going back there a couple times a year and you can run into some strange situations if you don't have a credit card of some variety. Like, to rent a car or to book a hotel room.


It also sets your insurance risk rating (don't ask me why!) in states that haven't banned this practice.


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## Rolling Stone (Mar 29, 2010)

Remember.....if you get a loan pay it timely but do not pay it off early. That will hurt your credit. It is the same as not carrying a balance on a credit card so the company can not make a profit from interest. I know several people who were damaged by those two clauses that are not talked about much and are not widely known.
Even as an expat I maintain a couple of credit cards, bank accounts and property with a mortgage in the USA just to assure we have current credit when/if we return one day. My Sister did not do that and spent just 4 years as an expat then returned and had to start over building her good credit again. Luckily they had enough cash to buy a house and cars without being stuck paying high interest loans when they returned.


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## Fatbrit (May 8, 2008)

Rolling Stone said:


> Remember.....if you get a loan pay it timely but do not pay it off early. That will hurt your credit. It is the same as not carrying a balance on a credit card so the company can not make a profit from interest. I know several people who were damaged by those two clauses that are not talked about much and are not widely known.


Disagree, totally!

The FICO algorithm does not care whether you pay interest or not. The calculator here was written by FICO -- nowhere does it ask you what interest you are paying. Why? Because it isn't used to calculate your credit score!

For a credit card -- pay it off in full each month. The most important thing is to always keep the balance below 20% of the maximum.

For an instalment loan -- run it for at least six months. But there is no penalty to paying off the principal early provided your loan remains open for at least 6 months.


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## Simon1 (Jan 9, 2010)

Visit the bank of america site> credit cards > build your credit
(the site won't let me post links)

Bank of America have a card designed for this ^

I'll be trying that soon most likely. 

Hope that helps


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## PDXnative (Aug 5, 2008)

If you can pay cash, pay cash. But I would not buy housing until you have lived in an area for awhile to determine if you like it. It is a buyers market right now, but that just means you might get stuck with it if you decide you don't like the area or you need to relocate. I would rent or lease for the first year.

As for credit rating. Just open a local bank account and get a visa or mastercard credit card through your bank. Credit ratings look at your credit/debt ratio. So, having a high limit with very little debt is best. You can use your credit card to make purchases then transfer funds from your checking account to pay it off in full.

Don't rush a credit rating, and if you can stay debt free, all the better. The only reason to have an excellent credit rating is to get good loans. But if you do not need loans, don't sweat it.


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## Guest (Apr 4, 2010)

Life in the US is very difficult without a good credit rating. You pay more for everything without a credit rating or with a poor credit rating. Some things are almost impossible to do without established credit. There are 3 main credit reporting agencies in the US, and all accounts may not necessarily show up on all three agencies reports. They rule life in the US and determine whether your life is easy or if it is a hassle, and it's certainly cheaper with a good credit score.

Examples:
1. You will be charged more for car insurance. Insurance companies figure that if you don't do a good job of paying your bills, you will be reckless in other aspects of your life, such as driving poorly or not maintaining your vehicle, thereby becoming more of a risk for a claim.

2. Utilities , such as water, gas, and telephone use credit ratings to establish an account. (and you need water,gas and electricity to live). They may require a larger deposit for the first year until they see that you do indeed pay your bills on time.

3. Renting a car usually requires a credit card, or a very large cash deposit if you are traveling.

4. Paying cash for an airline ticket receives extra scrutiny. (think Homeland Security)

5. Renting any type of housing usually entails a credit check by your landlord. Property owners want to know they will be getting the rent every month, without having to go to court or through an eviction process. For your first rental, the best route may be to get a letter from your employer acting as a co-signer/guarantor on your lease agreement for the first lease.

Normally, the best advice when moving to any new place is to rent for the first 6-12 months, in order to get your bearings and determine the best place for you to buy a house. This applies especially when moving to a different country/culture.

Another thing you may be able to do is to get an introduction to your employer's banker. (if they are a large company, go make a friend with the person in Accounting such as the Financial Controller who deals directly with the company's local bank branch - your co-worker is the person who calls the bank for any questions or banking needs, and usually know the person they are calling). This person can call his banker and make an appointment for you to see them.

You can explain to the bank contact that you are new to the US, and need to open financial accounts and to establish credit in the US. Your company's bank contact (a salesman after all) will probably be very happy, after your introduction, to open a checking account, a savings account, get you a credit card with a small initial credit limit, and maybe even auto insurance through the bank. They will also be very happy to set up automatic deposit of your pay to your bank account - this makes them feel more secure as they can monitor your finances if there are any questions. After an initial 6-12 months, they will normally consider an increase in your credit availability, and then each year after, the credit limit may increase by 5%-10%.

When you first open a bank account, stay put and don't keep hopping banks. There is an internal bank monitoring program on which banks share customer information on, and they can see the history and status of your financial accounts maintained in the area. 

Longevity of financial accounts is one of the criteria for a good credit rating. Your credit score will go up after 1 year, and then again after 2 years, etc based on the ages of your open accounts. The best credit scores normally have several accounts which are more than 20 years old. Other than your initial openings, try not to open more than one or two new accounts each year. Normally, a bunch of new accounts opened all at once are a red flag to financial institutions.

There is no difference to the credit reporting agencies between maintaining an outstanding balance on which you pay interest, or by paying off the balance each month. The number reported to the credit agencies is the total end of the month statement balance on each card. 

The magic number they like to see is less than 30% of available credit being used., i.e. if you have one card with a $2500 credit limit, another with $1000 limit and a third with a $3000 limit, they will be watching to see that you have neither more than 30% on any one card, or more than 30% credit of the total of the three cards ($6500 x 30% = $1950) in any given month. Make each payment due on time or a bit early, every single month. More than one late payment in a given year will lower your credit rating.

After your initial 6-12 months renting, with open credit being used, you would probably be considered for a mortgage on a house. You may have to make a higher down payment, and will probably pay a higher interest rate on the mortgage, but will be possible. Adding a mortgage payment to your credit reporting will raise your credit rating as long as you continue to make all payments on time, and having hte mortgage in itself will boost your score. Good luck.


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## Rolling Stone (Mar 29, 2010)

Fatbrit said:


> Disagree, totally!
> 
> The FICO algorithm does not care whether you pay interest or not. The calculator here was written by FICO -- nowhere does it ask you what interest you are paying. Why? Because it isn't used to calculate your credit score!
> 
> ...


30 Years of banking and loan experience in the USA and obviously I know nothing.....you are the expert on everything in the USA so I will no longer try to offer words of advice about what really happens after the algorithms when a lender is making a loan decision.


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## Fatbrit (May 8, 2008)

Rolling Stone said:


> 30 Years of banking and loan experience in the USA and obviously I know nothing.....you are the expert on everything in the USA so I will no longer try to offer words of advice about what really happens after the algorithms when a lender is making a loan decision.


In other words, paying interest does NOT increase your credit score.

I also have plenty of experience of the loan process.


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## Guest (Apr 4, 2010)

Credit cards and loans are the same as apples and oranges.

The issuing bank makes money on a credit card whether a balance is carried and is earning interest or not. There is a 3%-4% transaction fee on every charge. The bank gets a cut, Visa or Mastercard gets a cut, and the merchant takes the hit for accepting the credit card as payment. In effect, the bank is loaning me the money for up to a month before I must pay interest costs on the balance, which they can justify by receiving the transaction fees.

Giving a loan costs a bank money upfront in the form of the loan officer, processing costs, paperwork, etc, which they expect to recover from interest charges. If I go into a bank and ask for and receive a loan, the bank is out of pocket until they start getting interest payments from me. If they go through all of the work to give me a loan, and then I walk in two months later and pay it off in full, the bank loses. Banks, like any other business, need to make money.

Why wouldn't they ding my credit score after I so convincingly talked them into loaning me money and then I basically decided I really didn't need the $$ after all? Managing one's credit means handling money responsibly, and taking out a loan for which there is no need is a negative in terms of judging one's credit risk.


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## Rolling Stone (Mar 29, 2010)




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## Rolling Stone (Mar 29, 2010)

Fatbrit said:


> In other words, paying interest does NOT increase your credit score.
> 
> I also have plenty of experience of the loan process.


Bottom line is you are wrong and you cannot accept or understand that. I have been in meetings with the files open and have seen those with stellar credit be declined because they paid off mortgages and car loans too early. The bank depends on the full interest payments over the life of the loan. I saw a decision go negative on a 350,000 home loan over a 48 month car loan that was paid at the 15 month mark. They ended up offering the loan but at a higher interest to assure the maximum interest is gained if he decides to pay off the loan early. As a bank why would we want that business if they are going to pay early and cut out profits from interest? That was the theory.......during the house flipping craze you would see a guy that has paid of three mortgages early in the last six years and he is looking for a loan with a balloon payment......no way....If he is going to pay it off early why bother. The credit is just a hurdle everyone must cross but the actual decision has other factors when the file goes in front of the lender.

I remember a certain expat VP in our bank from Liverpool and we were directed to keep him in the dark about certain subjects.....finalizing loan decisions being one of them. As a foreigner you will never know what truly happens behind closed doors, even though you may think you do, and I tried to offer you a small peek along with advice but you have an overwhelming desire to be right. I will let you be because that is how you want it but you just block those in the forum that need real information with your petty behavior. That is unfortunate.

(_Insert your cut and paste from Google search or witty comeback here_)


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## Fatbrit (May 8, 2008)

Rolling Stone said:


> Bottom line is you are wrong and you cannot accept or understand that. I have been in meetings with the files open and have seen those with stellar credit be declined because they paid off mortgages and car loans too early. The bank depends on the full interest payments over the life of the loan. I saw a decision go negative on a 350,000 home loan over a 48 month car loan that was paid at the 15 month mark. They ended up offering the loan but at a higher interest to assure the maximum interest is gained if he decides to pay off the loan early. As a bank why would we want that business if they are going to pay early and cut out profits from interest? That was the theory.......during the house flipping craze you would see a guy that has paid of three mortgages early in the last six years and he is looking for a loan with a balloon payment......no way....If he is going to pay it off early why bother. The credit is just a hurdle everyone must cross but the actual decision has other factors when the file goes in front of the lender.
> 
> I remember a certain expat VP in our bank from Liverpool and we were directed to keep him in the dark about certain subjects.....finalizing loan decisions being one of them. As a foreigner you will never know what truly happens behind closed doors, even though you may think you do, and I tried to offer you a small peek along with advice but you have an overwhelming desire to be right. I will let you be because that is how you want it but you just block those in the forum that need real information with your petty behavior. That is unfortunate.
> 
> (_Insert your cut and paste from Google search or witty comeback here_)


I haven't blocked anything you said. Indeed, I've left it all here for everyone to read. I'm sure readers will make up their own minds.

The simple answer is that your assertion that paying interest affects your credit score is plainly wrong. You tell us some insider secrets, but fail to back them up with verifiable information. On the other hand, I've directed folks to the calculator which estimates your credit score. As all can plainly see, it never asks you what rate of interest you are paying since this is irrelevant to your score.

But it's no biggie. If you want to pay more interest on your loans in the mistaken belief it will improve your credit score, please feel free to do so. Don't get too upset about it! 

Oh, and BTW, just for the record, I am an American as well as a British citizen. Not that that makes my pronouncements any more or less valid.


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## Guest (Apr 5, 2010)

Fatbrit said:


> I haven't blocked anything you said. Indeed, I've left it all here for everyone to read. I'm sure readers will make up their own minds.
> 
> The simple answer is that your assertion that paying interest affects your credit score is plainly wrong. You tell us some insider secrets, but fail to back them up with verifiable information. On the other hand, I've directed folks to the calculator which estimates your credit score. As all can plainly see, it never asks you what rate of interest you are paying since this is irrelevant to your score.
> 
> ...


I've seen topics go off track, but it's rare that it's initiated by a moderator on the boards I follow. In this case, I believe that FatBrit is in error. Reread the entire thread.

Rolling Stone never made the assertion that paying interest affects one's credit score, he made the assertion (rightly so) that paying off a loan too early will affect your credit score. FatBrit has managed to twist paying a loan off early into the effect or rate of interest on one's credit score. (again, reread the entire thread). True, interest rates don't have an effect on FICO scores - they are generally the RESULT of a FICO score, good or bad. Paying off credit as agreed affects FICO scores, on time and according to the agreement.

The effect on one's credit score is due to not following the original terms of the loan agreement, and is not based on paying or not paying interest. There generally are clauses to a loan agreement providing for early payoff, but a ding to your credit is attached to that clause even if not in writing.

If you pay off a loan very early, it WILL affect your credit score negatively, like it or not. Paying off a loan early is a smaller sin than not paying a loan on time, but they are both viewed as negative information by a lender. The lender had planned on receiving future income in the form of interest based on your agreement, and now they won't be getting it and have to look for other places to employ their capital. Extra costs to the lender.

As well, yes - everyone applying for a loan has a FICO score. This can influence a loan decision, but lenders don't grant loans based solely on a credit score. Having a fantastic FICO score does NOT guarantee a loan - after all, that's what a loan committee does, and the FICO score is only one part of their decision. Rolling Stone tried to get that point across, but some didn't take it for what it was - a small clue to those who may not have understood the process in the US.

The loan officer might not have liked your argyle tie, or your police record, even if you have a FICO score of 800. In the end, all the bank cares about is recovering their capital plus interest earnings that justified the exercise, and the loan officer wants to keep and improve his job standing based on his loan portfolio performance. Granting loans that are paid off early helps neither the bank or the loan officer.

Does the OP have any other questions, or will this latest tit for tat continue ad infinitum, forgetting the needs of the OP??


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## Fatbrit (May 8, 2008)

GringoCArlos said:


> IRolling Stone never made the assertion that paying interest affects one's credit score, he made the assertion (rightly so) that paying off a loan too early will affect your credit score. FatBrit has managed to twist paying a loan off early into the effect or rate of interest on one's credit score. (again, reread the entire thread). True, interest rates don't have an effect on FICO scores - they are generally the RESULT of a FICO score, good or bad. Paying off credit as agreed affects FICO scores, on time and according to the agreement.
> 
> The effect on one's credit score is due to not following the original terms of the loan agreement, and is not based on paying or not paying interest. There generally are clauses to a loan agreement providing for early payoff, but a ding to your credit is attached to that clause even if not in writing.
> 
> ...


The OP wants to know if he could "also get a car and loan 5K and repay in a year to get a better rating...". The answer is that yes he can, but they'll offer him a "first-time-buyers" loan at a crazy interest rate over a 24-60 month period. Loans are state specific, but I know of no state where there are PPPs for auto loans. Provided he pays it off over at least 6 months, he'll boost his credit score and save a lot of interest. A year would be just fine. If it were his only credit line, he'd exit the year with a credit score of 700+ but would probably fail on applications for A credit lines for lack of history and insufficient lines. As I told him, it takes time.

Rolling Stone's posts certainly suggested that if you didn't make a profit for them (i.e. pay interest), you wouldn't get a good credit score. I disagree. What you have to do is play the game of understanding the credit scoring algorithms to get a good score. You've already pointed out their volatility with the limit:balance ratio on revolving lines......as have I. 

You contend that his score will be dinged if he does this. Fine! Find me some external and credible source that confirms this and I'll change my mind if it's true. It's impossible for me to prove a negative, so you'll have to research it and show us that this is indeed the case. And mentioning it's a secret that only Americans are told is not going to cut it.

I fully agree that underwriters don't make their decision purely on your credit score -- the credit score is just one of several hurdles you need to overcome. But I've never seen a rate sheet marked by whether or not a borrower has paid off early. And I've seen a few in my time. Again, if you can find me one, I'll certainly consider it.


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## Bevdeforges (Nov 16, 2007)

I want to add just one word of caution to this little "debate" on credit ratings...

Thanks to the abuses of the last couple of decades, the whole credit industry in the US is in a state of change. There are proposals (or maybe they've passed by now) for a consumer credit agency to regulate terms of credit cards, and many states are trying to better control some of the more rampant abuses practiced in the past. Meanwhile the credit card companies are finding new and more creative ways around the laws they see as going "against" them.

What worked 5 or 10 years ago for locking in a sterling credit score may or may not work now - and certain practices (like paying off loans early) may be viewed poorly by some banks or lending agencies and not by others. But even now, people with credit scores in the high 700's are being denied loans simply because the banks aren't lending to anyone in some instances.

The main points the OP needs to understand from this discussion are that a credit history takes a while to develop - by making use of small, simple and readily available means of demonstrating one is "credit worthy", and that a credit history (and thus a credit score) is a necessity in the US for a wide range of day to day transactions (such as buying certain forms of insurance) above and beyond any anticipated need for borrowing money in the future.
Cheers,
Bev


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## Rolling Stone (Mar 29, 2010)

Fatbrit said:


> Rolling Stone's posts certainly suggested that if you didn't make a profit for them (i.e. pay interest), you wouldn't get a good credit score. I disagree. What you have to do is play the game of understanding the credit scoring algorithms to get a good score. You've already pointed out their volatility with the limit:balance ratio on revolving lines......as have I.


You are confusing and twisting what I said to make your point:

_Remember.....if you get a loan pay it timely but do not pay it off early. That will hurt your credit._

I am referring to credit as in the eyes of the lender. You are refering to credit score, which I did not say. *Two different things*. Lending approval is subjective and the lending comittee makes the decision based on the credit worthiness percieved by information from several sources, not just a credit score. 

Cutting and pasting from google is artificial intelligence for those that have no real experience. Just going to google alone is admitting you do not have enough knowledge to answer on your own. Who really believes everything they google anyway? I was just trying to pass on real experience that you will never find on you beloved google. 

It is amazing the "all knowing" moderator is causing such a disruption by not even reading the post or confirming the intent before quickly rushing to google to prove everyone wrong. 

BTW - Thanks ******. you said it better than I could but unfortunately wisdom fails when presented to closed minds with their own agenda.


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## eleewhm (Mar 13, 2010)

thanks for all the reply... seems the easiest way is to get a credit card .. and start charging to it and pay on time... how about if a car cost $18K.. i put down 15K downpayment and loan the 3K for 6 months.. would it help me too???


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## twostep (Apr 3, 2008)

Rolling Stone said:


> You are confusing and twisting what I said to make your point:
> 
> _Remember.....if you get a loan pay it timely but do not pay it off early. That will hurt your credit._
> 
> ...


Give me a break. Name the bank who uses a credit committee to approve a 5k car loan. It runs straight through retail matrix. There is no personal decision unless you are dealing with a one-man-bank:>) Fico, car value, personal banking ahbits such as direct deposts may move the rate a bit.


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## Rolling Stone (Mar 29, 2010)

twostep said:


> Give me a break. Name the bank who uses a credit committee to approve a 5k car loan. It runs straight through retail matrix. There is no personal decision unless you are dealing with a one-man-bank:>) Fico, car value, personal banking ahbits such as direct deposts may move the rate a bit.


Now we are assuming this is for a 5 k junker? I was actually talking about a $350,000 home loan but you did not read back that far.....


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## Fatbrit (May 8, 2008)

eleewhm said:


> thanks for all the reply... seems the easiest way is to get a credit card .. and start charging to it and pay on time... how about if a car cost $18K.. i put down 15K downpayment and loan the 3K for 6 months.. would it help me too???


You're heading in the right direction in looking to establish both your first instalment and revolving credit line. Down the road, you'll want at least 3 or so of these on your credit history to qualify for A lines. However, your plan of "how about if a car cost $18K.. i put down 15K downpayment and loan the 3K for 6 months.." needs modification to have a reasonable chance of success. The main issue is that nobody is going to be particularly excited about giving you such a low loan amount for such a short time -- and as you're fresh off the boat, you'll need to take what you're offered rather than what you want because your shopping around will be limited.

So, we want to take an auto loan for the purposes of increasing your credit score while minimising the interest payments. Here's how I'd play it for an $18k car:

Look to put down around $8k on a "first-time buyers" deal, with a loan for the $10k spread over 48-72 months. The longer you can get them to span the loan, the better since this sets your minimum payment. Ignore the interest rate -- you'll not be paying most of it!

The first principle to learn is that auto payments do not have pre-payment penalties (though check when you're signing it since I wouldn't put it past them to try and pull one). The second is that interest is charged daily.

Your first payment is generally due at the beginning of the second month after signing -- they'll tell you you get the first month _free_, but the sad reality is that it takes them that long to produce the paperwork and get it to you. For this first payment we're going to wipe much of the interest out by making a huge payment to the principle of the loan. However, we don't want to end the loan too early because that would not help our credit. And to keep the loan going, we must continue to make the minimum monthly payments set at the beginning of the loan. That's why we went for the longest period they'd allow in order to keep these costs down.

So, fire up your favourite spreadsheet and start playing with the figures. I'd actually go for 12 monthly payments rather than six. Payments #2 to #12 must be at least the minimum monthly payment, while payment #1 should be the largest to minimise our interest outlay. Calculate the interest on each line by using 1/360 * days * rate * remaining principle of loan. Err on the side of caution by reducing whatever you calculate for payment #1 by a few percent and spread it out on payments #2 to #12.

For the first payment, clearly mark the _Memo_ line on the check as "Excess payment to principle ONLY" -- even though this is the law some may try to claim you've pre-paid interest.

Final advice is that buying a car in America is a unique experience that is probably like nothing you've done before. I like CarBuyingTips.com for a primer. Ignore the AOL/Geocities-esque layout and adverts since the information in there is pure gold and will make your car-buying experience less painful.


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## Fatbrit (May 8, 2008)

Rolling Stone said:


> You are confusing and twisting what I said to make your point:
> 
> _Remember.....if you get a loan pay it timely but do not pay it off early. That will hurt your credit._
> 
> ...


What Twostep said.

I draw your attention to Rule #1, #5 and #14 in the Forum Rules.


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## Rolling Stone (Mar 29, 2010)

Fatbrit said:


> What Twostep said.
> 
> I draw your attention to Rule #1, #5 and #14 in the Forum Rules.


1. Expatforum.com is an interactive site. P*lease treat others here the way you wish to be treated, with respect, and without insult or personal attack.* Personal attacks will NOT be tolerated. Trolling on this site is not tolerated, that being deliberately inflammatory posts, and trolls will be removed from the site immediately.
You are right in refering to the disrespectful and insulting remark Two Step made.....thanks for pointing that out

5. Please don’t discuss moderator or admin actions in the forums. If you have a matter to discuss please pm or email us.
What exactly are admin actions? Kind of vague but I assume what this is attempting to say is the moderators are untouchable since you do not allow PMs as several of the moderators have posted....got it.....I noticed others complaining about certain moderators but they were not directed to the rules.....hmmmmm

14. In return for permitting you to use the ExpatForum.com forum you agree with ExpatForum.com that *your contribution:
is your own original work and that you have the right to make it available to us for all the purposes specified above*
So no googling and pasting the work of others.....got it....does everyone follow that rule?


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## Fatbrit (May 8, 2008)

Rolling Stone said:


> 1. Expatforum.com is an interactive site. P*lease treat others here the way you wish to be treated, with respect, and without insult or personal attack.* Personal attacks will NOT be tolerated. Trolling on this site is not tolerated, that being deliberately inflammatory posts, and trolls will be removed from the site immediately.
> You are right in refering to the disrespectful and insulting remark Two Step made.....thanks for pointing that out
> 
> 5. Please don’t discuss moderator or admin actions in the forums. If you have a matter to discuss please pm or email us.
> ...


You're obviously more interested in messing this forum up than contributing to it. You didn't take the hint......so you can go and play elsewhere now.


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## twostep (Apr 3, 2008)

eleewhm said:


> thanks for all the reply... seems the easiest way is to get a credit card .. and start charging to it and pay on time... how about if a car cost $18K.. i put down 15K downpayment and loan the 3K for 6 months.. would it help me too???


You will have to go the loan route as a dealer will not accept a credit card unless he is in a dire situation. It costs too much for him to process.


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## twostep (Apr 3, 2008)

Rolling Stone said:


> Now we are assuming this is for a 5 k junker? I was actually talking about a $350,000 home loan but you did not read back that far.....


Not even that will run under commercial so - residential retail matrix.


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## Busybee (Aug 7, 2008)

I am replying as someone who moved to the USA from the UK 18 months ago. My husbands company gave us the following advice before we moved and it has helped us a lot.

1. Bring six months bank statements from your UK bank to the USA

2. Pay for a credit report before leaving the UK, and bring it with you.

3. If you have rented a property get your landlord to provide you with a reference.

4. If you have had a mortgage bring proof that you have paid it of, or that yu have made all your payments on time.

5. check to see if your bank in the UK has branches in the USA, fortunately we had always banked with HSBC and they have branches here, but not in the state we moved to. They did however prove very helpful in securing us a mortgage.

6. get an american credit card before you leave for the USA, we used American express for this, I believe there are a couple more available in the UK.

7. get your employer to write a letter giving the terms of your transfer/job offer.

8. If possible open a account at least 3 months before your move, try and open it with at least $1000 and add a amount each week/month no matter how small it helps.

On arrival in the USA expect all your insurances to cost more, once you have had them for at least 3 months (6 months is better) get new quotes, you will be amazed at how much they will have reduced.

We have followed all the above and have now managed to get a credit score in the high 700's, in just 18 months. Our insurance costs have dropped and we are now considered to have a fair credit rating. It is only considered fair because of the short credit history, we have been advised that we should move to good after 2 years. 

One other thing when you go shopping do not allow shops to persuade you into applying for a store card, everytime someone runs your credit your score goes down wait at least a year if you must really have one.

Best of luck


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## goodman (Oct 3, 2009)

We found it extremely difficult trying to establish a US credit score. Even though we had a good UK one it was not recognised here. The best way to start the process is to get a secured credit card through a US bank. You pay them the amount you want your credit limit set at and they then hold that money for a year, after which it is paid back to you. Your credit card is then converted to a regular card. I think at last we must have some credit rating now as we are getting pre-qualified application forms sent to us. Good luck


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## eleewhm (Mar 13, 2010)

thanks busybee...and goodman for the advice...


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## Gourockian (Nov 26, 2009)

eleewhm said:


> I understand that for the US , credit ratings are look uponvery closely... as i am moving to the states soon , and the company will be giving me a lum sum for relocation benefits.
> 
> My Plan is to get a place to stay.. most probably a housing in the range of 300KUS.. but i am wondering .. would it make sense to pay up in full or to loan like 50K and repay in 5 yrs.. to get some sort of credit rating score...or i could also get a car and loan 5K and repay in a year to get a better rating...
> 
> sorry i am new.. and i did read up on some credit rating scoring info.. but it was no help...


Credit scores are VERY important in the US. We moved to Florida from Scotland 14 years ago and applied for a mortgage to buy a house. Even though we were paying approximately 35% cash, we still did not know until the day of the 'closing' (when everything was being signed) if we were actually going to get the mortgage or not. This was because we had no credit rating in the US and our UK rating was of no interest to the banks.

My advice would be to rent a house for the first year or so and build up your rating by paying your rent & utility bills on time and maybe also taking out a couple of credit cards. Even if you do not need them, use them and pay them off monthly. Your rating will build quite quickly and will be useful should you decide to apply for the housing loan. Might even be worth getting a place that has a rent to own option. If you do decide to buy, be prepared to sign 'hundreds' of forms at closing .......... your wrist will be aching for days after.

Also, make sure you get a good realtor who can offer sound advice ..... our's was not too smart!


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## goodman (Oct 3, 2009)

Gourockian said:


> Credit scores are VERY important in the US. We moved to Florida from Scotland 14 years ago and applied for a mortgage to buy a house. Even though we were paying approximately 35% cash, we still did not know until the day of the 'closing' (when everything was being signed) if we were actually going to get the mortgage or not. This was because we had no credit rating in the US and our UK rating was of no interest to the banks.
> 
> My advice would be to rent a house for the first year or so and build up your rating by paying your rent & utility bills on time and maybe also taking out a couple of credit cards. Even if you do not need them, use them and pay them off monthly. Your rating will build quite quickly and will be useful should you decide to apply for the housing loan. Might even be worth getting a place that has a rent to own option. If you do decide to buy, be prepared to sign 'hundreds' of forms at closing .......... your wrist will be aching for days after.
> 
> Also, make sure you get a good realtor who can offer sound advice ..... our's was not too smart!


You are spot on with your advice (and about the paperwork, twice we had to go through all that signing and still ended up without a house, what a process!!!) We have gone down exactly the same road 14 years on! We had no US credit score but eventually found a lender who said they could carry out a "manual credit score" with the UK companies we were using for our mortgage, credit cards, etc. We had conference calls to the relevant companies and everything looked good. We were told "congratulations, you have been pre-qualified, go house hunting" and off we went. Found a new build, ordered all the counter tops, flooring, etc, paid our deposit, only to be told a month before completing the purchase the lender had pulled out. By this time we were completely fed up with the whole process and rented an appartment for 12 months, and what a relief that was. We could finally get our own furniture and belongings out of storage (more expense every month) and actually got settled after moving 4 times in 6 months, one of those months spent in a hotel room with a 4 year old and a large dog, bit stressful! I think now we arepon the reditsore ladder as we are getting appliations for credit c. ards sent to us. Anyone with questions regarding credit scores or house buying in the US, please contact me as I can let you know all the problems you will encounter


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## twostep (Apr 3, 2008)

Unless you are very familiar with a geographic area, its traffic patterns, tax/utility layout, school system - I strongly recommend to rent for a couple of months. Get to know your new surroundings, get over the initial moving/culture shock and learn about what is involved in buying and maintaining real estate in the US. There is more to it but credit rating and interest rates. Know your options, know your tools, know your tax benefits, be an informed buyer not a realtor's dream come true.


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## stingray01 (Mar 2, 2010)

Back in the 50's my parents instilled into all the family.. 6 kids, that if we wanted something we had to work hard, save and buy it outright. 

All the family did this to a tee, even the 5 bob a week catalogue buying for a suit was out.

I bought my own new s/d marital home in the Midlands for cash way back in 1966 for the princely sum of £2,650 all in. I worked hard and played hard but saving was very important to me.

i have carried this over onto my 4 kids and they all do the same now, if they can't pay for it now, they will save more and get it later.

I have a lovely home in Palm Coast which I bought outright. (pension)

I suppose I would'nt stand a chance of getting credit in the States because of no credit history. Not that I would ever want to borrow money..ever.

It's a great pity that the U.K. govt. did'nt put a few bob into the chancellors savings pot in the good times instead of 'blowing' it, we would'nt be in such a mess now.

Just my little rant..

James


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## eleewhm (Mar 13, 2010)

seems.. to be only way to get money is to borrow from my parents then!!! i need no credit score...hahahaha


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## twostep (Apr 3, 2008)

eleewhm said:


> seems.. to be only way to get money is to borrow from my parents then!!! i need no credit score...hahahaha


Unfortunately it is somewhat of a necessity in the US. From actual cash credit to leasing an appartment/car, getting utilities hooked up or just getting cell phone service. It is part of daily life.


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## Fatbrit (May 8, 2008)

eleewhm said:


> seems.. to be only way to get money is to borrow from my parents then!!! i need no credit score...hahahaha


Life is easier and less expensive with a good credit history.


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