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I just moved to the US for working purposes, and found out that for a lot of stuff you buy, you need to have a good credit rating (or pay more, or make a security deposit, etc).

I found out also that I'll need 3 months of credit history before owing a credit card. What are the main variables used in rating someone's credit and what should I do to develop a good credit rating fast?

6

There really isn't a way to do it that much more quickly.

Some major factors to help you build credit:
1. Pay on time: Late payments will kill your rating.
2. Keep accounts open a long time: The average age of your credit accounts is a big factor.
3. Keep the balances on each credit account low as a % of your line. Try not to go over 50% of your credit limit, even if you pay in full every month.
4. Open different kinds of loan accounts (credit cards, mortgage, auto, etc.) 5. Having a lot of new credit accounts hurts you, unfortunately.

Luckily #1 and #2, the ones you have the most immediate control over, make up over 55% of your total score.

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When I moved to the States about 13 years ago, I was already an American Express cardholder in the UK. They transferred my credit history from that account and I ended up with an almost instant credit rating over here. I'm not sure if they still do that, but it might be an option if you have Amex already.

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  • I'm about to move to the US for work and this is one of the most common advice I've got from friends already living in the U.S. That is, if you think you'll ever consider moving to the U.S. to live or work, you better get an Amex card right now in your country, because after holding the card for 12 months, you can transfer the credit history to the US (or any country you move to) and take your credit history with you. – silverCORE Jun 4 '11 at 13:43
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JohnFx provides some good advice. Here's one more idea:

If you can't get a regular credit card without a long enough credit history, one tool that could be useful in speeding things up is a secured credit card. Secured credit cards are offered by some (but not all) banks and credit unions.

They work essentially like this: You put some money on deposit with the institution to guarantee your credit card debt. They'll give you a credit card with a matching credit limit. Other than the cash required to secure the card debt (if you default on your payments), it works like a regular credit card in that your monthly payments are typically reported to credit bureaus, which helps establish a credit history.

Once you've got an adequate credit history, you can apply for a regular credit card.

Things will also get easier once your work history is well-established.

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  • 2
    Just be sure to stay well below the credit limit on the secured credit card. – JohnFx Mar 14 '10 at 16:58

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