By Karina Rook
When you rent a house in the Silicon Valley, your application needs to include a credit report. This is a document issued by a credit agency that looks up your public records using your Social Security Number (SSN) and assesses your repayment history on bills, store cards and loans. It is a measure of credit risk, and is used by landlords to select the best possible tenant.
When you are a new arrival to the US, you have no credit history, and you may not even have a SSN yet. When requesting a credit report online you will get an error message, which makes it pretty hard to complete that lease application. We resorted to using other means to reassure our landlord that we were a low credit risk, and thankfully that worked (we also offered more rent than what was being asked to seal the deal).
We also tried to get a store card from Target, JCPenney and Gap to take advantage of the 5% to 10% discounts being offered as we bought so many things after we arrived. Each of these was denied as we did not have US bank accounts for a sufficiently long enough period of time, and we had no credit history.
We had been advised to wait 6 months after opening a bank account here to request a credit card, but when we applied our application was initially rejected. Our Private banker was able to push it through after consulting with the district office, and we have a whopping $1,000 credit limit. Better than nothing, but it doesn’t take too many business lunches and work trips away to rack up a debt and wait patiently for the work expenses to be reimbursed several weeks later.
Interestingly, your credit score does not take into account your income. It is purely a rating of whether you pay bills on time, based on the past 7 years of bill-paying behavior. Things that affect your score are:
- whether you have a debt (if you have a good trend for repayments)
- whether your credit card limit is ‘maxed out’ (high utilization is not good)
- how long your accounts have been open in the US (the longer the better)
- how many times you apply for a store card/credit card (too many applications reduces your score)
The general advice here is to request your credit reports once per year and review the score. Look into any negative reports about repayments and resolve these with the credit bureau if they are unfounded. Keep an eye on the trends being reported and don’t apply for too many store cards, don’t max out your credit card and don’t close any unused bank accounts as these all affect your score.