Q: I just moved to NYC/the U.S. and it seems I have pretty much no American credit. I am planning on buying a co-op or condo in NYC within the next two years. How can I build credit with a purchase in mind?
A: This is an excellent question and it is great that you have given yourself a few years to build credit. Getting a secured credit card is a good way to begin building credit when you don’t have any. There are many sites that offer credit cards for all types of consumers with varied credit histories. You can go to credit.com or creditcards.com and find the cards that will approve someone with NO credit history. Once you read the terms, decide to apply, and get your credit card, you can begin to use it. Try to keep your balances low and pay them off over a period of 3-5 months; showing an excellent payment pattern will certainly help.
See if you have any family or friends in the U.S. who have excellent 7 to 20-year-old credit, keep low balances, and always make timely payments. If you trust them and they are willing to add you on as an authorized user, this can be a great plus that will help you build your own credit. The older the credit, the better it will be for your scores. Being an authorized user will afford you the benefit of the old credit within 3-6 months, but you will not be responsible for the debt or account.
Once you have these two cards showing up on your credit, you can apply for a third card based on your current credit score. Buying your Fico score will not hurt your credit. Go back to the site that offers credit cards and apply for a regular card (use your current credit score category to pick the best card offer). The credit card sites offer cards based on score category as well.
Once you have 2-4 credit trade lines on your credit report, you will be
in a much better position. Try to get all these cards within the first year so that you will have the second year to allow them to season. Remember, opening and closing credit can have a negative effect on credit scores. Once you have good credit scores, you want to be careful and strategic about deciding to open or close credit. For more educational credit information, you can go to North Shore Advisory, Inc site.