How to monitor your credit report while studying abroad in the U.S.
Building a positive credit history in the U.S. can make life a lot easier, especially if you’re planning to stay in the U.S. after you graduate. Without good credit, it can be tough to open a credit card, buy a car, rent an apartment or qualify for low-interest loans.
Fortunately, there are steps you can take while you study abroad to establish your credit in the U.S., such as obtaining a credit card and paying your student loans on time. Along the way, you can monitor your credit report and score to make sure your efforts are paying off.
Learn more about how to monitor your credit as an international student, so you can improve your financial health and set yourself up for future success.
What’s a credit report?
Your credit report sums up your financial history in the U.S. There are three main credit bureaus that collect information on your personal credit history to generate your credit report — Equifax, Experian and TransUnion.
Your creditors, such as credit card companies and student loan providers, send information to the credit bureaus about your accounts and payment history. Future lenders review your credit report to assess whether you’re a responsible borrower.
The information in your credit report can impact your ability to qualify for a loan, rent an apartment and buy insurance. Some companies also check out your credit report when considering whether to hire you for a job.
What’s a credit score?
A credit score is a number between 300 and 850 that represents the information on your credit report. Lenders and credit card companies also consider your credit score when you apply for a new account.
The higher your score, the easier it will be to qualify for loans and access affordable rates and terms. There are several types of credit scoring companies out there, but the one that lenders rely on the most is your FICO score.
Your FICO score is calculated based on the following categories:
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- Payment history (35%): Your payment history has the biggest influence on your score. On-time payments on debts will improve your score, while late payments will drag it down.
- Amounts owed (30%): If you’re using a lot of the credit available to you, your credit score could go down. It’s generally a good idea to keep your credit utilization below 30%.
- Length of credit history (15%): It usually takes six months or so of financial activity in the U.S. to generate a FICO score. Having a longer history can help improve your score. You’re not necessarily late to the game as an international student, though, as many domestic students don’t start building credit until college or after.
- Credit mix (10%): Having a mix of different types of accounts, such as a credit card and a student loan, can improve your score, as it shows creditors you’re able to handle different kinds of credit.
- New credit (10%): Opening a bunch of accounts in a short time can hurt your score, as it can indicate that you may be overextending yourself with borrowing money.
4 ways to monitor your credit in the U.S.
It takes time to build good credit, but you can monitor your progress along the way. Here are four ways to stay on top of your credit in the U.S.
1. Review your credit report for free
You can request a free copy of your credit report on a weekly basis from each of the three credit bureaus at AnnualCreditReport.com. On your credit reports, you’ll get a bird’s-eye view of your various accounts, such as student loans or credit cards. However, your credit report does not show your credit score.
Review all the information on your report to make sure it’s accurate. Creditors get things wrong sometimes, so it’s possible you could see an error on your report. If you spot a mistake, try disputing it with the credit bureau. You can also call your creditor about the issue.
Mistakes or unusual accounts on your credit report can also be a sign of identity theft. If you find mysterious accounts in your name. It could be a sign someone has stolen your personal information. In that case, you’ll want to freeze your credit and file a report with the Federal Trade Commission.
2. Use a free credit monitoring service
Although your credit report won’t show your credit score, you can find your score elsewhere. For instance, there are several free credit monitoring services you can use to check your scores and monitor them over time.
Some free credit monitoring services include:
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- CreditKarma
- CreditWise from Capital One
- myFICO (the free plan)
- Credit Sesame
- Experian’s free credit monitoring
Note that some of these services show your VantageScore, rather than your FICO score. Although the scores will likely be similar, it’s the FICO score that most lenders look at when you apply for a loan or credit card.
3. Check your scores through your credit card company
If you have a credit card in the U.S., you may get a free credit score when you sign into your credit card account online or via their mobile app. Many credit card companies will provide your credit score for free and can notify you if they detect changes to your score.
4. Pay for a credit monitoring plan
Paying for a credit monitoring plan is also an option if you’re looking for robust identity theft monitoring. However, it’s probably not necessary unless you’re particularly worried about identity theft or have been a victim of it in the past. You can find paid plans from various companies, including:
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- Experian Identity Works
- myFICO Advanced and Premier plans
- Identity Guard
- ID Watchdog
- Privacy Guard
Tips for building credit as an international student
As you monitor your credit in the U.S., here are some steps you can take to improve it over time.
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- Make on-time payments on your loans: Paying your bills on time is key to building a positive credit history and score. If you borrowed student loans from MPOWER Financing, MPOWER will report your payments to the credit bureaus. On-time payments will generally result in higher credit scores.
- Apply for a credit card: Having a credit card can also help you establish credit in the U.S., but try to pay off your balance in full every month. Otherwise, you could end up having to pay hefty interest charges. You may need a Social Security number or Individual Taxpayer Identification Number (ITIN) to apply for a credit card in the U.S. If you can’t qualify for an unsecured credit card, you might have an easier time with a secured credit card, which requires a deposit of funds upfront.
- Become an authorized user: If you have a friend or family member in the U.S. with a credit card, consider asking them to add you as an authorized user. You don’t necessarily have to use the card, but their payments can help you establish credit in the U.S. Make sure the cardholder manages credit responsibly, however, or their financial habits could have the opposite effect and harm your credit.
- Report your rent and utility payments: Rent and utilities aren’t typically reported to the credit bureaus, but you could sign up for a service to have yours reported. Some services that can help with this include Self, Piñata and Rental Kharma. Experian’s service, Experian Boost, will also take utility bills into account, such as phone, internet, gas and electricity. If you go this route, make sure to pay all your bills on time to avoid damaging your credit.
It usually takes several months to establish a credit score and even longer to build good credit. By paying back your loans on time and managing your finances carefully, you can establish positive credit in the U.S. Review free copies of your credit report on a regular basis and use a credit monitoring service to track your progress and watch your credit score improve over time.
