Credit in a New Country:
A Guide to Credit in the United States
One of the reasons credit is so widely
available in the United States is because we have a strong credit reporting system.
Credit reporting agencies (also known as “credit bureaus”) are companies that
collect information about how consumers pay their bills, and sell that information
as credit reports to businesses that may use them for credit, insurance, or
employment purposes.
Credit reports contain four basic categories
of information, including personal information (name, current and previous addresses,
Social Security Number), account information (credit accounts you’ve held, the most
you’ve borrowed, the current balance and whether you’ve paid on time), public record
information (bankruptcy, court judgments or tax liens) and inquiries (the names of
companies that have looked at your credit rating in the past two years).
Equal Credit Opportunity
Act
Under a federal law called the
Equal Credit Opportunity Act, creditors cannot discriminate against you because
of your age, gender, marital status, race, or country of national origin.
Types of accounts typically
included in a credit report include:
- Credit cards
- Department store cards
- Gas company cards
- Bank loans
- Auto loans and auto leases
- Recreational vehicle loans
- Mortgages
- Consumer finance company accounts
- Credit union credit cards or loans
Types of accounts that traditionally
do not appear on a standard credit report:
- Rent payments
- Rent-to-own accounts
- Payday loans or loans from check cashing outlets
- Checking account information
- Accounts with smaller lenders
- Debit cards
Some creditors will only report your
account if you are late on your payments, but not if you pay on time. Cellular phone
companies are a good example of this. They generally only report accounts that have
not been paid and have been turned over to collection agencies. The same is true
of most medical providers. Since companies are not required to report information
to credit reporting agencies, not all do. Some will report to one or more major
credit reporting agencies, but not all three of them.
When you are establishing credit, your
goal should be to get accounts that will be reported each month to all three of
the major credit bureaus. Be sure to pay each bill on time or you may risk a late
payment on your credit report. Late payments stay on your report for seven years
and make it more difficult to get credit at good rates and terms.
