New to America

Whether born in America or a newcomer to the land of opportunity, we're all looking for ways to fulfill the American Dream. But one thing's for certain: without good credit, the dream may be hard to reach.

For anyone in pursuit of life, liberty and happiness, credit is a fundamental prerequisite, especially when it comes to buying a car or home. This is why new residents of America need to begin establishing creditworthiness as soon as they settle in and find employment.

Unfortunately, getting credit is not always easy. Many U.S. creditors may be wary of lending to newcomers, who may return to their homeland and leave their debt behind.

Nevertheless, if you're planning to live permanently in America, you're eventually going to need credit, probably sooner rather than later. The easiest way to establish credit is by setting up a checking account at a bank and obtaining a secured credit card. The bank faces no financial risk because these cards are backed by your own money (typically $500, which earns no interest). Once you demonstrate that you pay your bills responsibly each month, the bank most likely will increase your credit limit and offer you a non-secured card.

There are some pitfalls to secured cards. Beware of scams that ask for up-front fees or have most of the balance charged to the card as security. Unless the issuer of the secured card reports your payment history to the credit bureaus, a secured card is useless for establishing a credit history. Interest rates can also be very high on secured cards.

If you belong to a credit union, you can deposit money in an account and then take out a loan. Because they are non-profit institutions that serve specific groups of people, credit unions often have more flexible lending guidelines than commercial banks.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.