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    Stilt Team (Edited )

    To build a good credit score, it is important to understand different aspects of a credit score.

    There are 5 major components of a credit score.

    1. Payment History - Based on a borrower’s payment history. This is the most important factor. Making regular payments on previous credit is very important. Try not to be late on your credit card and other credit payments.
    2. Credit Utilization - Make sure you don’t max out credit cards. It is important to maintain a good utilization rate (< 30% of your credit limits).
    3. Length of Credit History - It is important to show that you can consistently use credit responsibly that’s why you length of your oldest credit account is also matters.
    4. Credit Mix - Having different accounts and types credit accounts can show that you can manage different types of debts.
    5. New Credit - Low number of recent credit inquiries are important to show that you are not looking for credit all the time.

    Things like high of credit utilization, too many credit cards, late payments, and defaults will have a negative impact on your credit history. Some people have a misnomer that if they pay their credit cards in full, their credit history will be better than the ones who pay minimum balance. The truth is that it doesn’t matter if you pay your balance in full. Until you have negatives on your credit history, you are fine.

    Also, credit score is not the only thing banks and lenders worry about, length of credit history is crucial. If you have a good credit score but a very short credit history, it won’t help you much. This is because credit scores start becoming accurate representation of risk after 6+ years of credit history.

    “If you are a foreign national in the U.S., first try to get an SSN as soon as possible. This will allow third parties to report and pull your credit. The following will be useful only if your credit is reported to one of the major credit bureaus - Experian, Transunion, Equifax.”

    There are a few ways you build history and get a good credit score:

    1. Apply for a secured credit card: If banks are not approving you for a card even with a smaller limit, get a secured credit card. These are credit cards that are backed with a cash deposit from you. The credit limit is equal to the amount deposited. People usually get a $1000-$3000 limit card to start with. After 6 months - 12 months, you can convert your secured card to an unsecured card. This will help you get on the right path to build a credit history.
    2. Apply for a credit builder loan: There are several companies that can give you a small loan to help you get on the grid of U.S. credit system. They may ask you to provide the deposit which they will lend to you but the good thing is that they will report it to the bureaus. This will get you started with a credit history.
    3. Get a co-signer: If you have family, relatives or close friends who can act as a cosigner for your credit product, you can piggyback on their credit history to get started. Remember that they will be liable to pay for your defaults, so make sure they know this and are comfortable with cosigning.
    4. Become an authorized user on someone else’s credit card: Another option is to become a user on a credit card of your family member or a relative. You will get all the benefits of a credit card and start building credit history but not be obligated to pay for charges.

    Doing the above will help you build a credit history.

    About Stilt:

    Stilt provides loans to international students and working professionals in the U.S. (F-1, OPT, H-1B, O-1, L-1, TN visa holders) at rates lower than any other lender. Stilt is committed to helping immigrants build a better financial future.

    We take a holistic underwriting approach to determine your interest rates and make sure you get the lowest rate possible.

    Learn more about us on Wikipedia or visit us at https://www.stilt.co. If you have any questions, send us an email at team@stilt.co.

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