If you're moving to the US, you have many things on your mind. It can feel overwhelming, from adjusting to a new life far away from your loved ones to packing your belongings. While you might have heard and read a little about building a credit score, you might wonder what the big deal is. Precisely why we have penned this piece for you.
What is the difference between India and the US when it comes to Credit Cards?
Let's start with the most significant difference - the US is a country that primarily runs on credit. This translates to approximately 70% of Americans having a Credit Card, in contrast to only 3% of Indians using the same.
You've probably transacted more with a debit card or cash in India. In recent years, UPI has become an accepted mode of payment, making carrying a wallet or card redundant. When you move to the US, you will immediately switch to using Credit Cards since it's the most popular mode of payment.
What is a credit score, and how is it related to a Credit Card?
In simple terms, your credit score is between 300-850, and it determines your ability to pay your loans and dues. The higher the number, the greater your ability to get loans and increase your credit limit.
Your credit score isn't only dependent on your Credit Card. It reflects your overall ability to pay your dues and debts. Since you'll be making many transactions with your Credit Card, paying off your Credit Card bills on time is critical.
What's a good credit score?
Anything between 630-739 is considered a good credit score. As per the data from VantageScore, the average credit score in the US is 698, so it would be good to maintain that.
How to build a good credit score when you move to the US, and why is it important?
Here's the thing - your Indian credit score isn't valid in the US. This means you need to start building it as soon as possible. Also, if you will be in the US for an extended period, you need to do some form of long-term planning to build your credit score.
Here are some ways for you to build your credit score when you move to the US:
Pay your bills on time
This is one of the easiest ways to build your US credit score. Whether utility or shopping bills, you need to pay them regularly and on time. Also, you can now pay your utility bills via the Zolve app.
You will need to get a social security number (SSN), but consider making small investments as soon as possible. This tells a prospective lender that you're responsible for your money.
Keep a watch on your credit utilization ratio
This is the amount of credit you use compared to the amount of credit you have. An ideal credit utilization ratio is 30%. If your credit limit is $10,000, it's good not to spend more than $3,000. Overspending sends a sign to a prospective lender that you're not very responsible with your money.
Get a US Credit Card/ Open a bank account
While you can get a Credit Card in the US without a credit score or social security number (SSN), you might need to compromise on the credit limit or get a secured Credit Card. A secured Credit Card is when you give cash as collateral to get a Credit Card. But there is another option. Zolve gives you the high-limit US Credit Card and Bank Account that you can sign up for from your home country itself.
The best part? It's simple and takes less than 5 minutes to sign-up.