Having a good credit score is a necessity, this will allow you not only to obtain loans, but also to have more comfortable payments. In the USA, as well as in many countries, the credit history is the letter of introduction of any person.
In developed countries, everything is obtained through credit, from health insurance to furniture and houses. Credit is the easiest and most comfortable way to obtain things, in fact, it is what will allow you to enjoy the comfort of being from the middle class.
In this article, the operation of credits in the United States and how to make a good credit in the USA will be discussed.
How does credit work in the USA?
United States credit works in a similar way as in other countries. This consists of borrowing money to buy something and then paying the lender in installments.
Of course, you have to pay interest, that is, an additional percentage of the acquired debt. This is how lenders make money.
Now, borrowing money is a very serious business and although lenders have their clauses to force you to pay, they prefer to deal with a reliable customer than with a problem one. In such a way that it is necessary that you have a good credit history.
How do I know if I have good credit in the USA?
The credit history is the one that will testify for you in any place where you want to request a loan. If you have a creditor, he must report your credit activity to a credit agency, in this way it will be reflected if you are reliable or not.
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Steps to establish a credit history
The agencies and even the people who make you a loan will analyze several factors in order to know if you are a punctual client. In this regard, they will take into account the following:
- Secured credit cards
- Secured credit or a loan with a confirmer (credit builder)
- Credit cards or third party credit card authorization
If you are using any of these options, you should know that the lender will take into account the regularity of use. It is important that you have a good credit score at the beginning, otherwise, you will get obstacles to getting good loans.
How do secured credit cards work?
This is an excellent method for building a credit history. Remember that no one will lend you money if there is no record of your payments. For new clients, secured credit cards have been created in which an amount is deposited into the account. (Money deposited is the loan limit)
Its operation is similar to a conventional credit card, you can make purchases, there are expiration dates, interest is generated, etc. The deposit made is a guarantee in case the payments are not fulfilled.
When you finally proceed to close the account because you have already generated a good history, all the money deposited will be returned to you. The idea is to demonstrate solvency in operations. There are several secured credit cards, we recommend choosing one with low interest.
On the other hand, it is very important that the agency or bank that has provided you with the insured card sends the reports of your use to the credit agencies, in this way the guarantee remains, and the objective of this type of account is fully fulfilled.
How many points is a good credit in the US?
The credit score is a relevant aspect, this will open the doors to good loan amounts. Credit points range from 300 to 850.
Those that have:
- 850 are rated excellent or exceptional. It is rare to have such a high score
- From 740 to 799 you are in the “good” range
- 670 to 739 is the “medium” rating. This means that you are not bad, but you are not good either, it is acceptable
- 580 to 669 which is below fair
- 300 to 579, it’s bad
In the United States, good credits start at 700. At the same time, you should know that some agencies or lenders set their own standards for what they consider “good.” For example, some consider that a score below 600 is bad, so if that is yours you will have problems accessing financing.
How to make a good credit in the United States?
Good credit is achieved by sticking to the financing parameters, paying on the agreed dates. Now, if you have a low score you can change it, USA is known for being lenient.
Negative Items, including going bankrupt, don’t stay on the record forever (Gone in 7 years). Sure, during that time you may find yourself needing to borrow, but no one will. So it is best not to fall into this situation.
In any case, it is opportune that you review the reports to verify any negative information, and if it is an error, correct the negative information of your credit cuts, as they will affect the financing.
If you really have a negative score, due to a calculation error or an excess of expenses, you can try to make a good credit score in the USA. Here are some tips to turn your negative score into a positive:
- Pay on time so you can raise the score to a positive one
- Keep your credit card balance low, in order to have a positive usage rate
- Make credits in moderation, this way you avoid many bills
- Pay services on time so that bills do not go into collection
- Review negative Items and make sure they are no longer reflected in the report
It is crucial that you follow these steps for a reasonable time, at least 6 months so that significant changes are reflected. Doing a positive credit reconstruction is not an easy task, it can take a couple of years. But with effort and discipline, it can be done.