So you know the basics, you’ve got your first credit card and you’re ready to start building a good score. We sat down with Bank of the West’s Julien Christiaens to get the lowdown on building and maintaining your credit report.
LITB: How do you build a good credit history?
JC: The goal is to show you can manage debt, which means that having one credit card isn’t enough. So think about having a mix of credit. You may want to consider having a couple of credit cards, a store card and a car loan to create variety. You might need two or three different types in order to build a solid score. If you plan on applying for a mortgage, analysts will look at your credit report more closely.
LITB: Having lots of credit sounds like the opposite of good financial management to me.
JC: In many European countries taking on debt is viewed poorly but used wisely credit can be a powerful financial tool and using credit products is a necessary step to build a good credit score.
LITB: If my credit score is based on my ability to manage debt, should I max out my credit card each month?
JC: It’s pretty important to keep your bills below 30% of your credit, both per card and across the total credit that’s available to you. So, if you have a card with a limit of $1,000 try not to spend more than $300 on it. If you have access to a total of $10,000 in credit, try not to spend more than $3,000 across all cards. By doing that you indicate that you can manage credit well: you could spend more, but you don’t. Also, try to pay your statement in its entirety every month. If you can’t, then make sure to at least make the required minimum periodic payments on time.
LITB: I’ve got my credit score into the high 700s, so I’ll be offered the best interest rate, right?
JC: You may have a high credit score but the length you’ve had that score also impacts the interest rate you’ll be offered by lenders for big purchases. If you’re thinking about buying a car or a house a high credit score doesn’t guarantee the best rate. Lenders will also take into account the length of your credit history when deciding the terms of the loan they’re willing to offer you. If you know you want to purchase property while you’re living in the US, think about your credit score early – you can’t make up for lost time!
LITB: Can I start building my credit score before I move to the US?
JC: No, unfortunately not. You can open a bank account, but you’ll need to be living here before you can get access to credit.
LITB: Any specific advice for expats?
JC: Once you have built a strong credit score, look for credit cards that offer generous rewards. That way you can save on trips back home!
LITB: Any final thoughts?
JC: You should probably know that you may need a good credit report for your career, as well as for your financial health. Indeed, some employers may look at your credit report as part of a background check.
LITB: Thanks Julien… I’m off to check my credit report.
Content sponsored by Bank of the West
The International Banking Group is a team of Bank of the West specialists dedicated to helping expatriates in the U.S. Our multiple backgrounds help us build international client-specific solutions that address the unique challenges and opportunities facing international clients. Contact Julien Christiaens, VP – Area Manager, for more information.