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Mailbag Monday: Building a Credit History from Scratch

Paid InvoiceSince I moved to the U.S., I have not established credit of my own. I am always dependent on my husband. I was told that if something happens to him, I will be in dire straits. Is this true?

— Mary Jane

Unfortunately, someone new to the U.S. is no different than anyone else who hasn’t established credit: You need to start working to build a history. No credit can, in some cases, be nearly as detrimental as bad credit, because it can impact your ability to qualify for a mortgage, car loan or credit card. Lenders want to see a demonstrated history of paying your bills on time and managing credit wisely.

That said, it’s often easier to build a good credit history from a base of zero. You’re not digging out, you’re just trying to get some positive data on your file. You don’t have to worry about, say, a bankruptcy that won’t fall off your report for seven years.

Relying on your husband isn’t a good idea for the reasons others have mentioned to you: If something were to happen to him, or you were to get divorced, you’d still be without a credit history of your own. It’s important to have your own separate financial life, even in a marriage. So I suggest applying for a card in your own name. Choose one that is for people with limited or short credit histories (here are a few options from LowCards and CardHub, two of my favorite sites to search for credit card offers). Then use it for a few purchases a month and pay it off in full. Keep in mind that you may have to get what’s called a secured credit card, which is like a credit card with training wheels. It looks and works much like a regular card, but requires a “security deposit” as collateral. If you use and pay off your secured card regularly over the course of a year or two, it will transition into a full-fledged credit card. Be sure to choose a secured card that reports to the credit bureaus.

Finally, one way your husband can help is by adding you as an authorized user on his cards, which will further help you build credit and continue to take on more of the credit responsibilities in your family. As time goes on, your file will grow thicker and you’ll start to establish a positive credit score, as long as you manage your credit wisely.



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