Establishing Your Credit History in the U.S.

How to build credit and keep debt far away from your finances.

In the financial world of the United States, establishing credit is almost a “necessary evil.” It’s necessary because a credit card is convenient when you are renting a car, making reservations for a hotel or even getting your telephone or electric turned on in your house – otherwise you’ll be paying a large deposit to the phone or electric company. It’s evil because debt problems and fraud are highly associated with credit cards.

In order to help you establish a healthy credit history in the U.S., Consolidated Credit created this guide for those of you who are new to managing your money in the U.S. If you ever get into trouble or just have questions about how to avoid problems, we can help. Call Consolidated Credit today at or request help with a free Debt & Budget Analysis.

Understanding credit reporting in the U.S.

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 then they sell that information in the form of a credit report to businesses that may use them for credit, insurance, or employment purposes. The top three bureaus are Equifax, Experian and TransUnion.

We offer a complete section on Credit Reports to help you understand what information appears in your reports and what it means. For this overview, it’s just important to note that if you don’t pay your credit card bill or car loan on time, the lender will report it and negative information will appear in your credit report. Late payments stay on your credit report for seven years and can make your financial life miserable. Lenders can refuse to extend other lines of credit and increase your interest rates.

Getting to know your U.S. credit score

In the U.S., every consumer has a credit score – a 3-digit number that assesses each person’s “credit worthiness.” Credit scores vary from 350, which is poor, to 850, which is excellent. When you have a high score, you can qualify for loans and credit cards at low interest rates. On the other hand, if you have bad credit then you will be charged higher interest rates if you can get approved at all.

We explain exactly how credit scores are calculated and what you can do to change your credit score in our full Credit Scores section. What’s important to note here is that until you take out a loan or get a U.S. credit card, you won’t have any credit history. This means your credit score will be really low. You need to take steps to start using credit so you can establish a good credit history. We explain how in the next section.

Getting started

Building a credit history can be difficult but there are methods to help. First, the Fair Isaac and Company has developed a new credit score called the FICO Expansion Score. “Based on non-traditional credit data, it can effectively predict risk for the growing number of US consumers that don’t receive a traditional FICO score due to non-existent or “thin” credit histories.”

Another option is a company called Pay Rent Build Credit (PRBC). They state that “Using your utilities, cable, rent, mobile phone and other every day bills, we can help you establish a PRBC Alternative Credit Score. Then we’ll help you find businesses ready to accept this score, and offer you credit.”

If you’re trying to build credit, you can also use many of the same tips we offer to consumers who want to Rebuild Their Credit.

What types of credit can you apply for?

You can apply for a traditional credit card, but you may need the following items:

Every creditor has different requirements, so be sure to ask about the lender’s minimum requirements before you apply for their credit card.

Other types of credit to apply for include:

Installment loans: A loan that is repaid over time with a set number of scheduled monthly payments. An example is a car loan that you pay off in two to five years.

Secured credit cards: This could be your first step into the world of credit. You need to make a deposit and borrow against that amount, while you make monthly payments to build credit.

Tips for smart credit card use

Once you establish credit, use these tips to avoid payment penalties and debt.

Once you establish credit, do not abuse it. Continue to make timely payments and only charge items on your card that you need because debt quietly builds up and can bury you.

Avoid credit card fraud

The U.S. Federal Trade Commission gives these tips to avoid fraud:

We Can Help You Get Ahead Now that You’re Here

If you’re concerned about taking credit card debt in the U.S. or just have questions regarding money management in general, call Consolidated Credit today. A certified credit counselor can evaluate your debts and help you better understand your finances. Call to speak with a credit counselor now. You can also take the first step online with a free Debt & Budget Analysis.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

All Consolidated Credit counselors are certified personal financial counselors (CFC) We've helped 5 million people get out of debt! Call us today and see what we can do for you.

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Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

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