Creditorance in the USA

0
Creditorance in the USA

In the US you can not avoid the topic of “credit history”. Even if you do not want to take out a loan, sooner or later you will need a credit history report. How do you get a credit history and what is it good for?

For many years, it has been common in the US to obtain data on new customers before granting even the smallest amount of credit. And credit does not necessarily mean money lending! No matter if it concerns the car insurance, the telephone connection or the new house. The data of the applicant is always used to ensure that the risk is not too great. These data are collected by various credit bureaus who are constantly collecting the latest information. Even insurance companies are increasingly checking whether the applicant belongs to the desired clientele or not. The major credit bureaus in the US include Experian, Equifax and Trans Union. These offices scrutinize every “movement” of the customer and constantly determine a current credit score.

Here is a short overview:

DEFINITION When looking at the credit history of a person, one looks at the financial past.
It is given information about how creditworthy the person is. With a special formula that each office has developed differently, a number is determined that allows comparison with other people. At the same time, this number is often the basic requirement for a particular loan offer.

WHAT IS EXACTLY CONTAINED?

To be read:

  • Employment information, where, how much, what was earned
  • Score information, so the rating number (s.u.)
  • Information on current credit lines and the resulting mtl. burden
  • Deleted credit lines stating who has terminated the loan
  • How often and when a payment to the vendor was late
  • Distressed loans
  • Forced collection by a vendor
  • Financial court judgments (eg.
  • Number of requests to the credit bureaus
  • artist and second names (alias)
  • Social Security Number as atomic number

WHAT IS A CREDIT SCORE?

The Credit Score is a number that can range from 375 points to 900 points. The more points you have, the more creditworthy you are. Surely you do not have to be at the top of the 900 points to get a loan. However, the banks reckon with a lower number with a higher risk and can of course also pay for it. Anyone who has ever followed the USA commercial television or the radio in terms of financing car or other items, will always come across the small clause “Qualified Customers only” or a similar clause. Because not everyone gets the promised financing of the dream car to the advertised conditions without further ado.

Since each individual credit bureau works individually and independently of the others, three different rating numbers often appear. This arises because each credit bureau has its own formula to assess the applicant and / or one or more information was not known to all offices in identifying.

WHY DO YOU NEED A GOOD CREDIT SCORE?

There are certainly countless applications to use the credit history and may I forgive if one or the other application should be missing in my article. It is only an excerpt of some common possibilities.

Everyday: Even the simplest things in the US require a good payment history. This you get at the latest, if you want to register his phone. If you do not meet the requirements for new customers, you can expect a not too tight deposit. Unlike in Germany, where practically everyone was not terminated by the Telekom without further gets a telephone connection.

It continues with cable TV, mobile phone, electricity, gas, water. All these companies take a look at the credit history in order to read the payment behavior of the customer. One sees in this example that these are things of the simple life that are denied one with bad entries in the credit history.
Immobile purchase:

While Germany primarily pays attention to the security of mortgages and “only” has to prove the income for the installments, it is somewhat different in the US. As mentioned earlier, with a small mistake you can not buy a property and just because you forgot a payment you do not have the certain points to get the credit approved.

I already had clients who downplayed their credit due to their lack of knowledge and their German “do-it-yourself” mentality. In the said case one wanted to save the expenditure for a professional assistance of a Mortgage Broker and went as well as in Germany from bank to bank. You always paid on time and therefore did not seem to need a mortgage broker. Because of these frequent requests, however, the credit score was pushed down so far that you now had to spend more on the higher interest rate.

Incidentally, the same happens when shopping in the car dealerships, if you give his “Social Security Number” to reckless. It takes a while for the score to recover.

CONSTRUCTION OF THE CREDIT HISTORY (Built Credit)

Essentially it is easier for an American who has been involved in this system from an early age to get an easier loan than an emigrant who has only recently arrived in the country. However, this is mainly due to the fact that the Americans have been “watched” by credit bureaus from a very young age and thus a better, more accurate result is achieved. With the receipt of the Social Security Number the “game” can begin.

Therefore, one should urgently and immediately after the arrival of the social security number and strive to build up his credit history. Time is a significant factor in calculating the credit score.
Every lost month, every year lost can be a considerable obstacle for the new inhabitant. At about 15%, the time factor is included in the calculation and at the same time it is the easiest to fulfill.

It does not take forever for them to make up for the downside of their American counterparts. After about 2 years, their efforts are in the whole juice and the offers will only rain on them. Regular numbers and no negative events provided. However, every supposedly good offer is not always as good as it looks! There are both positive and negative behaviors that can drive personal score up (better) or down (better).

To pick only a few points:

Positive affects:

  • Punctual payment of the agreed rates (about 35%) (prefer to send the payment a little earlier than necessary)
  • Adequate number of loans
  • Not too many credit cards / small loans
  • Length of the entire history (about 15%)

Negative affects

  • disproportionately high loan amounts (about 30%)
    (eg all credit cards up to the last dollar at the limit)
  • Late payment of installments
  • Too many requests for information in a short time (about 10%)
  • Frequent change of residence

To unravel the completeness of one of the most related phrases from the media jungle, a brief explanation:

“Bad Credit”: Bad credit is when you are already established creditworthy, but the loans were not properly served and / or the loan has become a bad loan. Rates were not paid, securities used, or similar. Credit Score of about 375 – 619

“Bankruptcy”: The debtor had a bad loan and could not meet the demands of the creditors. This form of disclosure allows you to start again from now on, even if most credit requests are rejected first. It has to be said that a “bankruptcy” represents a financial fresh start and starts again at 0, so to speak. All old debts are discarded. After about 7 years, the bankruptcy note disappears from its credit report and is fully rehabilitated.

No Credit“: At this level you are when the Social Security number has just been reassigned and no credit appears on the report. One is like a newborn who has not noticed either good or bad. At this stage you will almost never get a loan. However, you can apply for a “Secured Credit Card” (credit card with deposited, pledged cash as collateral) Some car dealerships also finance a car on higher terms.

“Credit Score 0” (your report is almost empty)

“Good Credit”: This is the level you are working towards first. One sticks to all specifications, but one would have to put this a little longer to the test. Credit Score 620 – 769

Perfect Credit: Not the smallest negative feature can be found in this credit report. This level has been held for 2 years.

“Credit Score 770 and more”

These terms will be heard mainly in advertisements, commercials or radio. There are no fixed rules from which score you have now reached which level. There are more keywords to roughly describe the creditworthiness.

WHERE DO I GET A COPY (M) OF A CREDIT HISTORY?

Only the applicant, as well as the persons authorized to do so, can obtain information. However, there is also a lot of abuse with the SSN, especially if you are frivolous with the SSN. The famous “pre-approved” credit cards with a stated limit fluttering into the house without asking, make plenty of use to query the credit bureaus.

Depending on the state, the credit bureaus charge approximately $ 0 – $ 10 in fees for a copy. If your spouse or co-borrower also needs a copy, the fee will double. You need to call or write to the respective credit bureau for information. However, it is much easier, and also cheaper, at a Mortgage Broker Corp. to request and pay a lower fee. The information, in which all three offices are queried at the same time, is certainly one of the best practices, but at the same time the most expensive. However, you can see its complete history and not just 1/3 of it.

The only advantage of the self-inquiry is that this does not trigger a point deduction.

THE BENEFIT OF A GOOD CREDIT HISTORY AND A GOOD CONSULTATION

Once you have a good credit rating, the financial limits are more generous than they are without. In order not to stand helplessly in front of the unfamiliar matter, I can only recommend the first purchase of a property or new construction of the first house in the US to consult a mortgage broker. It may look very unusual and expensive for the German eye at first glance. However, as previously mentioned, it pays off through better advice in retrospect. You should therefore hire someone to check the financial side in your favor.

CONCLUSION On the whole, one can say that basically the whole evaluation effort that was carried out in Germany by an experienced specialist is packed into a simple, comparable form. Thus it is easier for the funder to get an idea of ​​the applicants and to compare them. If you know how, then credit history is not too big a hurdle. You should start early to build your own credit history. Just as early you should start to get acquainted with the circumstances and get advice if necessary.

CEVAP VER

Please enter your comment!
Please enter your name here