A concept that regularly confuses recently-arrived African immigrants is the overwhelming importance of credit history within the United States.
In simple terms, your credit score registers aspects of your financial history—particularly if you pay your bills promptly—and determines whether or not it is risky to lend you money. As such, if you have a good credit score, it is assumed that you can purchase goods and services will pay for them appropriately. It makes you come across as reliable and trustworthy.
Within the United States, there are three credit reporting agencies—Equifax, Experian, and TransUnion—dedicated to collect, organize, and keep track of credit histories and determine, subsequently, the appropriate credit score. This information is called a credit report and is sold to multiple agencies. It contains credit accounts, information on loans, bankruptcy history, and other aspects considered financially relevant.
As such, when you attempt to purchase or rent a property, the owner or landlord can access your credit report and determine whether or not you can be trusted, and you can be denied based on your credit score.
However, this often goes beyond that. Negative credit scores can influence things as simple as getting a mobile phone contract or as relevant as your employment odds, since specific fields require a background check on potential employees’ credit reports.
Luckily, every legal U.S. resident is entitled to an annual free credit report. Claiming yours allows you to review the aspects that may be working in your favor or, instead, affect you negatively.
When reviewing your credit history, keep in mind that maintaining a good credit score boils down to healthy financial practices. Make sure to provide timely payments, have low balances on your credit cards, amongst others.
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