A good credit rating is important to life in the USA: how an immigrant can build it from scratch

Immigrants come to the United States without a credit history in this country, but it is needed for a variety of purposes, from renting a home and hiring for certain jobs to checking in hospitals. A good credit rating is important to living in America. How to build and improve it? Tells USA Today.

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A good credit score is one of those important milestones to strive for. This does not mean that you have paid off all your loans, but it is a sign that you are doing well. You can qualify for most of the best credit cards, and you likely won't be turned down for a mortgage or loan.

You may want to know how long it will take to build a good credit score. It’s different for everyone, but you can reasonably assume its duration based on the experience of other consumers. However, you first need to understand what is considered a good credit history.

What is a good credit rating

A good credit score is a FICO® score between 670 and 739. FICO is the most widely used credit scoring system, using a score range of 300 to 850.

There is another popular credit rating system called VantageScore. It also uses a rating range of 300 to 850. On this system, a score of 661 to 780 is a good indicator.

If you are going to check your credit rating, do it better with the FICO® Score, as lenders use this rating most often.

On the subject: Unexpected Factors Affecting Your US Credit Rating

How long does it take to get a good credit rating

When you start from scratch, it usually takes one to two years to get a good credit rating. This is provided that you do not make mistakes that will harm your credit history (late payments or the accumulation of a large amount of credit card debt). Anything that negatively affects your credit will slow down your progress.

The reason this takes time is because of the credit history building process itself. The first step if you are getting a loan for the first time is to open a credit account. To assign you a credit score, FICO requires that you have a credit account that is at least six months old. VantageScore can give you a score even if your score is “lower.”

In both FICO and VantageScore systems, the most important factor in calculating your score is your payment history. Each timely payment increases your credit score. This is the biggest reason you won't have a good credit rating right away. You need to create a strong billing history.

Consumers who open credit accounts use them regularly and always pay them on time. As a result, they achieve a good credit rating within two years.

Restoring a good credit rating

A period of one to two years applies to those who receive a loan for the first time. However, it doesn't necessarily take that long if you are restoring your credit after your rating has dropped.

When the credit rating is restored, the time will depend on why it dropped. If you have withdrawn too much from your card and the loan utilization rate has become too high, then you can fix it in one or two months by paying off the debt. On the other hand, if you've filed for bankruptcy or had multiple late payments, it can take years for your credit rating to recover.

You may be interested in: top New York news, stories of our immigrants and helpful tips about life in the Big Apple - read it all on ForumDaily New York

The path to a good reputation

Setting credit goals is smart. And a good credit score is a common starting point. You can't be sure how quickly you'll get there, but if you follow the right financial habits, you'll make steady progress.

Fortunately, there is nothing complicated about what you need to do. Get at least one credit card that you use regularly. Avoid spending too much - try to never use more than 20% of the total loan amount. The most important thing is to always pay your bill on time and ideally in full so that you are not charged interest.

That's all you need to do for a good credit rating. After that, make sure you stick to the same habits to keep your score growing.

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