How do you get a credit rating?

Old Aug 1st, 2008, 02:42 AM
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How do you get a credit rating?

As some of you may know DD and SIL are now living in Columbus Ohio having moved from New Zealand just over two months ago.

They have found a house to rent, have bought a van, have car insurance, opened bank accounts, have a land-line and have now got social security numbers. However when I was talking to DD tonight (Via Skype a great program) she said they can't get US credit cards as they haven't got a credit rating.

Any ideas how this can be achieved. We suggested buying something on hire purchase (not sure if that's the term that is used in the US) but she said you had to have a credit rating to buy something on HP. So it looks you just go around in circles.

They do have NZ credit cards but would like US ones so they can buy things over the internet among other things.

They managed to feature in one of the Columbus papers yesterday. Here is a link if anyone is interested.

http://www.theotherpaper.com/article...8637571388.txt

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Old Aug 1st, 2008, 03:13 AM
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Have them try store credit cards first. Macys, JC Pennys, or whatever is in their area. They seem to be a little easier to get.
Charge just a little and then pay on time. Don't get the bill up too high because the interest is very high on store cards.
Also, try a Visa or Master card tied to a store, such as Target, their supermaket, or Costco. I also think by paying the rent, insurance, and all their other bills on time it will show up on a credit report.
Hope this will help them.
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Old Aug 1st, 2008, 03:26 AM
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lvktravel gives advice that has always worked - but I have no idea if it still works in current tight credit. Having a job, stable address and bank accounts marginally increases credit score - but that will not be of immediate help to them.

Another suggestion is to see if their bank has connection to any type of secured credit card - what this is is a credit card which must be "secured" by having deposited in a bank account an amount to satisfy credit line. Then charge away - not just a few dollars, but demonstrate that they can run up the line and then PAY IT OFF when due. This will cost nothing in interest if they pay off full balance on time. There may be an application fee or annual fee for a secured credit card (usually $25-50 per year).

And it is not just buying on-line that is a problem without a credit card. Renting a car, hotel room - even setting up account at dry cleaner or video rental store usually requires a credit card.
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Old Aug 1st, 2008, 06:24 AM
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On my last visit to the U.S., I was surprised to see what looked like prepaid MasterCards for sale. Do they really work? And if you buy and use one of those, will they count for credit reports?
http://www.mastercard.com/us/persona...d/issuers.html

I believe utility payments get included in credit reports. Yes, no?

Unfortunately, this is just the wrong time to try and get into the CC game. If they arrived a few years ago, they'd probably have been fending off credit card offers.

We have kept our U.S. bank account and one credit card active so that when/if we return to the U.S., we'll at least have something (good) in our credit report.
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Old Aug 1st, 2008, 06:35 AM
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Dont know the cost, but you could always go to a "Credit Repair" business.At least until the rule changes are effectively implemented, these places will actually be able to continue to remain in business.They are there for profit, so they'll take your money even tho you do not have any credit problems.Aside from the fact that you dont have any as yet.
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Old Aug 1st, 2008, 06:51 AM
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You could suggest that they visit the bank where they've opened accounts. Perhaps someone at the bank can process an application with their New Zealand credit report?
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Old Aug 1st, 2008, 07:11 AM
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Go to the bank that you now have an account with and ask them, show them your NZ Credit Cards. You may have to establish a 'secured credit card'. Basically you deposit certain amount of cash in an savings type of an account as collateral and they will give you a credit card with a limit up to the amount you have in the secured deposit. After showing you are responsible in paying the bill, in full and on time each month with this type of account, for about a year, ask them for a 'regular credit card'. Usually a Visa or MasterCard is the most versatile. You have already established some financial credibility with the other things that have been accomplished like renting, bank account, phone service, buying a vehicle and insurance. As has been mentioned store brand credit cards are also a good way to establish credit but in some cases can only be used at that particular store. Credit takes time to establish. Good Luck - http://www.myfico.com/
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Old Aug 1st, 2008, 07:18 AM
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Paying rent and utilities on time is not reflected in your FICO score (which is the most widely used method of determining your credit worthiness)....but if you don't pay, then the delinquencies and/or collections would show up. (So while paying rent/utilities doesn't help you, not paying could hurt you.)

Check out www.myfico.com for general info on credit scoring.

Also, I would call the credit card companies directly to ask them if they're able to use their NZ history as consideration for being extended credit in the US. When I worked in the mortgage industry (up until Oct 2007), we *would* consider employment/income history from foreign countries when the person was new to the US...it just had to be done manually.
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Old Aug 1st, 2008, 08:38 AM
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To answer Bitlke's question the "pre-paid Mastercards" he/she saw for sale are not credit cards but pre-paid debit cards. You can use them wherever Mastercards are accepted but they DO NOT count toward your credit score as no credit is extended to the purchaser. You are paying things with your own money - the Card only carries the MC logo since it can be used wherever MC's are accepted. MC credit doesn't even know you have purchased the card and the purchaser's name is not tied to the card in anyway.
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Old Aug 1st, 2008, 08:46 AM
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I've heard a credit card can be "secured" and "unsecured".

"secured" means you open an account with $500 that you can't touch, and you get a credit card for the same amount.

If you use your credit card and pay it off on time, they increase your credit. This is how you build your credit history.

From there, later you move on to "unsecured" card.

I was told, Citibank does that, but don't have more information.

Maybe Google search for "secure credit card" ?
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Old Aug 1st, 2008, 01:12 PM
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Thanks for the replies, I will tell her to check out Target as she seems to do a lot of shopping there. She does tend to pay off the balance in full so the higher interest rates shouldn't be a problem.

I will also do the google search on secure visa cards.
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Old Aug 1st, 2008, 01:34 PM
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BEWARE!!!...If you go to Target, Home Depot, stores that offer a "Target Visa" or "Target MasterCard", that is NOT what you want to do....It is my understanding that if you apply for THAT card, it will result in a deduction from your credit score.The store will not tell you that.Store cards that you DO want are Macy's, Dillard's, etc.I will have to look at home, but I think JC Penny converted to a MasterCard in the not too distant past...
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Old Aug 1st, 2008, 01:38 PM
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Why would one of those affiliated Mastercards be a bad thing on your credit rating?
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Old Aug 1st, 2008, 01:39 PM
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I'm curious BeachBoi,

If the main objective is to get a Visa or M/C, how does getting one issued by Target hurt?

Even if it initially lowers a credit rating, doesn't it serve as a foundation upon which to build?

My recommendation would be to walk into the local bank where they have their accounts, and presumable deposit their paychecks and talk to a rep a the bank about getting a Visa or MC issued by them.
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Old Aug 1st, 2008, 01:44 PM
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This is the problem J62. They are musicians so don't have a regular weekly paycheck.

I have looked up secure credit cards and found there is a card issued by Applied Bank which looks reasonable. Does anyone know anything about this bank.
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Old Aug 1st, 2008, 01:47 PM
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Got it. I get offered a visa or mc credit card at Target every time I shop there (clerks must get some reward if you sign up). Ditto for Home Depot & Macy's (which is less frequent). Worth a try if they haven't tried that route yet.


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Old Aug 1st, 2008, 02:01 PM
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nelsonian - Many college students also don't have regular paychecks, and they are targeted for signing up new credit cards.

I still think they should *call* some of the bigger/more popular cards, explain the situation (especially if able to document NZ credit), and ask if there are any options for them here using previous non-US credit history.

Beachboi - The fact that the credit card is a Target or Home Depot card certainly does not differently impact a credit rating. *ALL* new credit cards "hurt" your rating simply for the fact that it's a new credit inquiry, a new account, and that you now have more money for you to borrow and essentially get in trouble with (if you're not careful).
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Old Aug 1st, 2008, 02:06 PM
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Bank of America also offers secured credit cards.
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Old Aug 1st, 2008, 02:52 PM
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Gas cards work. Chevron/Exxon is one. You have to use them! but just a little bit each month so that you can pay them off right away. It takes about 3 months for the credit score to begin to show up.
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Old Aug 1st, 2008, 02:56 PM
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Ditto the idea of a secured credit card. They should just visit the bank where they have established savings/checking accounts and see what the bank offers. That will get the them started.

I like beanweb's suggestion too, although I have no personal experience with this.
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