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How to build credit from scratch

Jan 04, 2010 | | Comments (1)

Dear Liz: I’m 27 and a recent immigrant to the U.S. who just got a Social Security number. What’s going to be my initial credit, and how can I improve it as quickly as possible?

Answer: Until you actually apply for credit, your credit reports are likely to be a blank — which is going to make getting credit tough.

The best way to start is probably with a secured credit card. You make a deposit with the issuing bank of $200 to $1,000 and get a card with a credit limit that’s the same amount. (You can find secured-card offers at www.cardratings.com, www.creditcards.com and www.indexcreditcards.com.)

As long as the bank reports the card activity to all three credit bureaus, that will help you build your credit. Use the card lightly but regularly and pay it off in full every month.

In addition, consider getting a personal loan from a credit union (again, one that reports to all three bureaus). Paying off the loan over time will also help boost your credit history and scores.

When your FICO scores reach the mid-600s, try applying for a regular, unsecured credit card to further increase your numbers.

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