Capital Investment Advisors

How to build your credit score when starting from zero

Dear Opening Credits, I’m new in the United States, and I moved just recently. I must start from zero and am planning to stay in the U.S. permanently. I plan on getting my Social Security number, ID, driver’s license and green card. I have a part-time job, and I am starting full-time next week. What is your advice on building my credit score, and how do I start? – Sanel

Dear Sanel,
Welcome! It’s great that you’ve already started integrating into the United States. With your identification, resident and employment status, establishing yourself in the banking and credit world should be easy. Once you have your documents, here’s what you need to know and do, in five simple steps.

1. Open a checking and savings account.
If you haven’t yet, form a relationship with a financial institution by opening a checking and savings account. This shows stability. There are many choices, from major banks (such as Bank of America and Chase), to regional and smaller banks as well as credit unions. All are fine, but before deciding on one, review a few. You’ll want excellent customer service, low fees and plenty of accessible ATMs so you don’t have to pay extra to use another bank’s machine. Once you have opened the accounts, contribute money to your savings and be careful not to overdraw your checking account.

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2. Familiarize yourself with consumer credit reports and credit scores.
There are three major credit reporting agencies in the U.S. – TransUnion, Experian and Equifax. Creditors and other entities send them information about your credit and debt activity, and the agencies compile that information into credit reports. Other businesses, when you apply for credit or a loan, will access these credit reports to understand what kind of borrower you have been. Credit scoring companies, such as FICO and VantageScore, take the data from these reports and turn it into scores, which range from 300 to 850. Higher numbers indicate less lending risk. To create top scores, you’ll need to pay multiple accounts on time and in full over many years.

3. Apply for a secured credit card.
Because you haven’t had a credit product yet, you don’t have anything on a credit report or a credit score. That makes businesses reluctant to lend you money. However, you can minimize that risk by offering collateral. With a secured credit card, you deposit a set amount of money (tap your savings account for the funds!), and the issuer grants you a credit card with a spending limit that’s usually equal to that deposit. If you rack up a debt and don’t pay, the issuer can claim what you owe from the cash you put down as collateral. Check out a wide variety of secured credit cardsand select one that you like. If you have the money for a deposit and a steady income, you should be approved.

4. Use the secured account perfectly.
Now it’s time to fill your credit reports with positive information! The easiest way to do this is to choose a regular expense to charge every month. It should be low enough so the balance on your card is never high. For example, if you can spend up to $500, never charge more than $100. Set up your checking account so the credit card bill is automatically and completely paid each month before the due date. For credit scores, timely payments and low or no debt matter most, and with this system you’ll ensure both. Because you won’t be carrying a balance from month to month, you won’t pay any interest. This is important because the interest rates on secured cards tend to be higher than those for unsecured cards.

5. Add another credit product.
After six months, your credit record will be lengthy enough that it will generate a FICO score. Having a credit score and credit reports populated with positive information will give other credit issuers confidence in your abilities to repay them. Open another credit card, this time an unsecuredcard, and use it as responsibly as with your first card. Some secured card issuers will let you take your deposit back and transition the account into an unsecured product. If so, take advantage of that, but redeposit that money into your savings account. That will be your security against financial emergencies.

But wait, there’s more! Always keep an eye on all accounts so you can spot and resolve problems quickly. Use the free credit score and report tools at to track your progress. Pull your credit reports at least once a year, too, at It’s free and seeing what being reported about you is illuminating.

Once again, welcome to the United States!

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