Credit History & Credit Cards
- a guide to American consumerism!

Credit history is a record of an individual's past borrowing and repaying. “Credit” refers to any type of loan or financing extended to a person. Every time you apply for a credit card, or an automobile loan, or a mortgage, that counts as credit, and starts appearing in your credit record. Whether and what kind of credit you get in future depends on this record. And once you get credit, how you use and repay it impacts your history again.

Whether you want it or not, your credit history needs to get established and once established, will get updated based on your repayment record. You may think you don’t need credit and are a cash-only type of person. But credit is so ubiquitous in America, and preparing for future needs so important, that consciously establishing a credit record is strongly recommended.

Once established, health of a person's credit history is measured by a number called a 'credit score'. Lenders like banks and credit card companies use credit scores to determine who qualifies for a loan, at what interest rate, and to what credit limits.

When I was in my home country (India), I had two credit cards - one from an Indian bank and the other from Citibank. I had been using these credit cards for over ten years, and had never been late on my payments. The credit cards worked not just within India, but internationally. I therefore (naively) assumed I would have no problem getting a fresh credit card issued here, especially since one of my Indian cards had been issued by an ‘American’ bank.

Imagine my shock when I went to the Citibank website, applied for a credit card online, and received a rejection a few days later. A rejection! My ego took a heavy beating.

I was so upset and so sure they could not reject my application, I thought they had made a mistake. So I called up the bank, and asked the representative to do a re-application (a very bad idea, as I found out later). And I got rejected again!

Here is an important lesson for all immigrants and migrants.

It does not matter what your income is, in the US. It does not matter how good a credit record you had in your home country. It does not matter what kind of visa you’re here on. You will likely start your credit history in the US from zero. You therefore have to build it step-by-step.

Of course, if you lived in the US previously, your credit history will pick up from your previous record. Credit histories are intimately tied to social security numbers (remember, SSNs are the most widely used unique identifier).

Coming Soon! Real-people experiences, comparisons and recommendations on credit cards and banks.

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