Credit history is a very important especially if you live in the US. It is linked to a whole lot of things in a person’s life – your apartment, job, auto loans, and credit, mortgage etc. Hence an individual’s credit history plays a crucial role as it is the deciding factor in case you wish to avail credit. However, it is a bit complex especially if you have no credit history and if you have to build one.
First of all, you have to begin somewhere if you have to build credit history from scratch
. Every individual’s credit history is linked to the social security number. Your credit history reveals your payment history, delinquencies, delayed payments, late payments, missed payments etc. It reveals everything that a lender might want to know such as the credit limit, the payment patterns and other such vital details.
To start off with, you should live in the US for at least a period of 6 months. If you get credit card offers in the mail, it does not mean that you will automatically get an approval for a card. You will have to meet the eligibility criteria in order to obtain a card. If you don’t meet the requirements, then you might be denied a card.
A person’s creditworthiness is determined based on your ability to pay or your willingness to repay your debt. There can be no discriminations based on religion, sex, race, nationality, age or income through public assistance. Even if you have been denied a card, the lender will give you a written explanation as to why you were denied the card.
If you have no credit history, it is important to build one at the earliest as everything is related to your credit history. Your credit history or credit report is important to lenders as they base all their lending decisions only after they are satisfied with your creditworthiness which is obtained through your credit history or your credit report.
If you have a good credit rating, then you obviously are credit worthy and you don’t pose a risk to the lenders and they will be more than happy to extend credit. However, having a poor credit history will let the lenders know that you are a risky customer and you may be denied credit by most lenders. Some lenders might offer you credit despite that but you will be charged a heavy interest rate.
Even landlords will in all likelihood, take a peek at your credit report to ensure that you are capable of paying their rent on time. Employers will also do the same to check to see if you are responsible enough or if you have stayed on in a steady job for a substantial period of time.
Hence building credit history is very important for a whole lot of things and not just merely to avail credit. So, it is better to start somewhere rather than remain without a credit history. Ideally, if you can start building your credit history from the time you are in college, it will be a lot easier for you to avail a home loan later.