Towards the US Dream

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The United States of America is vastly diversified with immigrants and refugees from different parts of the world. USA has an immense demographic variegation of the immigrants and refugees. In a sense, USA is a melting pot of all people with different ethnic background.

There is no doubt that people envision the lives in the Unites States to be very prosperous. When one thinks of how he/she can emerge as a successful person in terms of leading the American life, there comes several issues to take care of. Nonetheless, that is not impossible either. Interestingly, what I have learnt is when any immigrant thinks of the American dream, it is nothing big but getting a decent job, have a nice car and settle down in a comfortable home.

A few weeks back, I had a brief encounter with an individual who had come to my office to open a bank account. I discovered that he was a fellow refugee from Bhutan, and he was resettled in the United States just a couple of months back. He looked perplexed about the financial situation and the policies governing the same. My little conversation with him was good enough to learn that his ultimate goal is to get a credit card. He was looking forward to buying a car down the road. I put his situation in my shoes and started to ponder on the issues of credit establishment.

Whether it is with an immigrant or with a refugee, the common goal would be to get the credit history established so that one can sustain a lifestyle of supreme value and high dignity. With an exception of a few people, majority of newly immigrated ones seem ignorant on the special situations that goes into credit. There are many things to know. However, it may be relevant to put forth basic ideas behind the concept of credit, and targeted to the general readers.

To put it simply, a credit or a credit score in the US is a number representing a general qualification for burrowing of a person, the probability that a person will pay his/her debts. Various factors goes into a credit reports. Just to name a few, paying bills and debts on time, the amount of debt owed, the number and type of credit used and the length of accounts opened play a significant role towards credit establishment. There might arise questions on the process of obtaining credit by a new resettled refugee without any debt, bills and so on. But for refugees traveling to the United States already have a source of establishing credit history because they are issued a loan by the International Organization for Migration (IOM) to pay for the cost of their immigration from overseas to the United States. People are aware that promissory note is signed by every refugee prior to arrival to the US confirming the refugee’s agreement to make monthly payment to the sponsoring agencies like USCCB and Church World Services. The loan is an interest free which refugees begin to pay back after three to six months of resettlement. Paying the minimum amount due by or before the due date definitely accelerates the process of getting credit history strongly established. Therefor, IOM loan should not be considered a burden instead it should be considered a stepping stone towards credit establishment.

Besides, there are important steps and procedures of getting one’s credit established. Many people fail to understand that the initial step would be to set up financial history which can be obtained by opening a bank account. Although it does not go into credit file, the creditors often request for bank accounts prior to approving one. Some departmental credit cards are easier to obtain than the bank credit cards because the balance generally does not revolve, paying off those flat balance would be the finest means of healthy credit. Obtaining a secured credit card with Savings account as a recourse would be an option as well.

How can we exclude another interesting way to getting credit card which is non other than riding on someone’s shoulders who already has a good credit history? Of course, he/she should have to be willing to co-sign. But one must be aware that any default of credit on his/her part affects the credit of the co-signer. Paying off the debts on the completion of billing cycle accelerates the issues as it reported as “pays on time” report card on one’s credit file.

Having a credit card with higher credit line is vital but equally important is to refer the pricing like annual fees, Annual Percentage Rate( APR)  which is the annualized cost an individual pays for credit products ( e.g., loan, credit card), including certain fees and it is usually expressed as a percentage , associated with the credit card prior to going for one. Noteworthy, APR does not accrue if the total statement balance is paid off. Credit cards with lower purchase APR can save thousands of dollars a year . Significantly, seeking out for too many credit in short period of time has unfavorable impact on one’s credit report because it indicates of a debt being added to him/her as a liability. Credit experts say that using 30 to 40 per cent of the credit line has a constructive credit report card for a credit building individual because it reduces the debt to income ratio which is a key factor in credit approval process. Individual with high debt to income ratio may be eligible with the credit line lower than that with lower ratio. Logically, total credit usage has an inverse effect on the total credit sought after.

All credit reports are based on one’s personal information like name, date of birth and most importantly Social Security Number(SSN). We must be aware of the current occurrences where one can be a victim of Identity Theft.

While we are discussing the credit issues, it is noteworthy that there are three consumer reporting agencies which track and monitor our credit reports and scores, viz., Equifax, Transunion and Experian. The Fair and Accurate Credit Transaction Act enables us to receive a free credit report per year from each of the three credit bureaus. It is advisable to order credit reports by phone rather than using the online system because of ongoing occurrences of Identity Theft.

It is never too late to correct any discrepancy that may have occurred in our credit history. It may take a little time to dispute it, but it is always wise to make any correction if needed. It should not be presumed that  there will be an auto correction.

In a nutshell, whether it is a question of renting an apartment or buying a dream house, craving for a dignified lifestyle with luxury cars or obtain a promising job; a good credit is the threshold to this era.

[Mr. Sharma is a former Bhutanese refugee and Personal Banker based in Syracuse, NY. The views expressed in this write up are solely of the writer who can be reached at [email protected].]

26644 COMMENTS

  1. This article seems to be an eye opener for people resettled in the US.

    We get a basic joy ride into the “credit” situation. Its a one of a kind of an article. Thank you for informing me and many like me. But if this article was published a few years back, we could have survived many unwanted financial decisions we made. But its never too late to educate people.

    PS: BNS seems to have great diversity in its articles too.I hope to see many articles like this one here: educating people about the new things in life.

  2. Hem bhai I think you are the first person in our forum to write about the financial issue and trying to educate our community. Yes this is a burning issue and I am longing to learn more on this subject to maintain a credit history, which otherwise will mess up and bring complications in the personal financial world. Some of my queries are addressed by this article. Thanks man.
    Actually I am looking for info as to how the IOM loan will invite problem. I also learnt that there is a provision to waive the loan legally, for certain vulnerable population, without affecting the credit. How about that?
    Your article is an eye opener and probably the first “Bhutanese Wall street journal” and I hope more people will join hands to high light the financial issues that they are facing in the daily basis.
    Hem bhai keep more posting, it is worth knowing which might prevent us from messing up the credit history, and it will go a long way to protect us from identity theft and other financial irregularities of this complex world. Thanks
    DB Adhikari
    Tucson

  3. I feel very happy to go through Mr. Sharma’s article on Credit issues. Indeed, this is very important for us to know about the credit history, and other related issues. I am about to get resettled in the USA and I had been thinking about the IOM loan and I was not happy at all. But, now, I am relieved a bit.

    Next, my humble request would be if the writer can illustrate in his next opinion how bad credit will ruin us. And, if you could try to make it a little simpler, in a simple language, that will be easier for all to understand.

    BNS team, can you translate such articles in Nepali and publish them?