One of the things that is very different in France and in the USA is the infamous “credit score”.
If there are any non-American people reading this post, the short on that is that here in the USA you cannot get a loan or a really good credit card without a good credit score.

What is a Credit Score

“A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report information typically sourced from credit bureaus.” (source Wikipedia).

The 3 major credit bureaus in the USA are Equifax, Expirian and TransUnion.

Basically your credit score shows lenders (banks, credit card companies for example) if there is any risk lending you money.
You can see where this is going to be important… If you ever need to buy a car, or a house, you are going to need a good score to get a good rate.

Where do you get that score?

Now here is where things get complicated, you actually have multiple credit scores… Equifax, Experian, TransUnion take the same information and translate it into different scores. It’s because their methods of calculating scores differ. The 2 most popular scoring models are FICO and VantageScores.

Yes I know… that doesn’t help.

You can get an excellent score for one and only a good rating for another. In my case, my TransUnion score tends to be better than my Equifax.

Range of Credit Score

The typical range for a Credit Score is 300-850, divided in zones.

Roughly, the zoning is as follows:

• 300 to mid-600s: poor
• Mid- 600s to mid-700s: fair to good
• Above mid-700s: very good and excellent

This is what Credit Score companies track to build your Score (source Credit Karma)

• Credit card utilization: high impact on your score – using less than 30% of your credit limit is generally recommended
• Derogatory Marks: high impact – need to be avoided at all costs because they can stay on your report for 7-10 years
• Payment history: high impact, you need to hit the 99-100% target there because it is a good sign for lenders that you can reliably make payments
• Age of credit history: medium impact, you are good to go after 7 years… Told you it was going to take some time…
  Lenders like to see that you have experience using credit in a responsible way
• Hard inquiries: low impact, hard inquiries from things like credit applications can stay on your report for up to 2 years. Better if you stick around 0-2 hard inquiries
• Total accounts: number of credit card accounts you have, low impact on your score but to be on the good side of it you need more than 11 accounts! Apparently lenders like to see that you’ve used a variety of accounts responsibly.

Funnily enough, I have 2 Hard Inquiries (from Discover and Macy’s) on my Equifax score but 0 on my TransUnion…

The bad news when you arrive in the country

Now the bad news is that when you arrive, you do not have a credit score because the credit bureaus do not know you.
Especially if you do not have a permanent resident permit yet, because they rely so much on the SSN (Social Security Number), and you cannot get one unless you have a permanent resident permit (or Green Card).

Any new immigrant in this country knows that the Green Card is really the key to opening doors.

Once you get your Green Card, you can head over to your local Social Security office and ask for a SSN. Be ready to spend quite some time there… It’s a government agency so a lot of people go everyday and the waiting line can be long.
That SSN will enable you to go to your local DMV (Department of Motor Vehicles) and get a driver’s license, which is the one piece of ID people typically ask for. Again, be prepared for the waiting…

I personally think DMV is way worse than the Social Security office!

Anyway, once you get your SSN, you can start to apply for credit cards. Because, guess what? The way to build your credit score is actually to use credit!
I know that sounds counterproductive but bear with me for a minute: remember, what builds your credit score is your capacity to reimburse in a timely manner the money you take from those credit cards or loans. Hence the need to get credit cards and use them.

How I started building my score

When I first got my Green Card (and SSN and driver’s license), I tried to start building my score by applying for a Macy’s credit card, thinking it was a way to build my score slowly by making small purchases and paying them off.
Unfortunately that didn’t work out too well and a few weeks later I got a letter in the mail telling me my request has been denied. The credit bureaus basically had no knowledge of me thus couldn’t give Macy’s any information on my capacity to reimburse a credit.

So I started researching online and came across credit cards available to people with no credit or a bad credit.
I came to the conclusion that for my personal case, a Discover card would be my best fit.

When you first start with Discover, they ask you for a deposit, which represents the maximum amount you will use each month. That amount is your credit limit.
After 6 months, if you have been good, and paid all your bills on time, they will increase your credit limit and send you your deposit back.
Plus you can earn cash-back on your purchases and for the 1st year they match your cash-back amount! Awesome, right?

But let’s face it, building a good score was going to take some time, if I was only relying on my Discover card.
I was lucky enough to be able to become an authorized user on my partner’s Lowe’s credit card and thus benefited from the good credit my partner has and the credit history on that card too.
That helped getting my credit score to a good score pretty fast.

To track my credit score(s), I use Credit Karma, which comes with a free app for your phone. It gives you both Equifax and TransUnion scores and what affects those scores.
The Discover app also gives you a FICO score.

Bottom line

If you are starting from scratch, here is my advice to start on the right foot:

• Research options like Discover to start on your journey to a great Credit Score
• If you can be an authorized user on somebody else account (only if he/she has a good score though), go for it, it will save you years of building your score
• Always pay your bills on time
• Keep your credit utilization low
• Be careful when you apply for a new credit or you risk increasing your “hard inquiries” number
• Use apps like Credit Karma to keep track of your progress and possibly make some corrections

[DISCLAIMER: I am not a legal or financial adviser, the views expressed in this post are my own and come from my own personal experience, they might not apply to your situation].

What about you? Do you have any Credit Score story to share?