If you're moving to the U.S. for studies, no doubt you have many things on your mind like packing and adjusting to your new life. While you might have heard and read a little about building a credit score, you might be wondering what the big deal is about it. Precisely why we have penned this piece for you.
What is the difference between India and U.S. when it comes to credit cards?
Let's start with the most significant difference - the U.S. is the land of credit cards. In numbers, this translates to approximately 70% of Americans having a credit card. Contrast that to India, where roughly only 3% of the population uses credit cards.
In India, you've probably transacted more with a debit card or cash. In recent years, UPI has become an accepted mode of payment, making carrying a wallet or card redundant. When you move to the U.S., you will immediately switch to using credit cards as that's the most popular mode of payment.
What is a credit score, and what does it have to do with a credit card?
In simple terms, it's a number that measures 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 is number between 300-850.
Your credit score isn't only dependent on your credit card. It's a reflection of 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.
How to build a good credit score when you move to the U.S. and why is it important?
We've come to the crux of this piece.
Here's the thing - your credit score, even if you have one, isn't valid in the U.S. This means you need to start building it as soon as possible. Also, you will be in the U.S. for a longish time, which means 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 U.S:
Pay your bills on time
This is one of the easiest ways to build your credit score. Be it 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) for this, but consider making small investments as soon as you do. This tells a prospective lender that you're responsible with your money.
Keep a watch on your credit utilization ratio
This is the amount of credit you use when compared to the amount of credit you have. An ideal credit utilization ratio is 30%. If your credit limit is $10,000, it's a good idea 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 U.S. credit card/ Open a U.S. bank account
While you can get a credit card in the U.S. 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 U.S. 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.