Building up Credit from Scratcj?

Question

How can I build up my credit rating from 0 asap?

I'm a US citizen, but I've lived for 20 years in other countries. I'm moving back to the states soon with my family and we're planning on investing in real estate in the near future, including possibly house hacking.

We have no debts and have some money saved as well as a bit of inheritance.

What do you recommend doing to get good credit and how long will it take before I can qualify for a mortgage? Is one year unrealistic?

Paying for everything with credit cards? What about debit cards? Not good enough?

What about insurance? Do insurance payments influence credit?

(Note: I posted this in the Getting Started Forum first, but it seems it was the wrong topic.)

Ramsey Rimkeit · Answer

Thanks for the great advice!Is 30% of a credit card limit so important if we pay the bill right away every time?

Eric Delcol · Answer

@Ramsey Rimkeit

"We have no debts and have some money saved as well as a bit of inheritance."

That's a good start.

"What do you recommend doing to get good credit and how long will it take before I can qualify for a mortgage? Is one year unrealistic?"

I'm assuming you know the basics of paying in full, on time, etc.

Here's a few things that will help fast track to establishing credit

-Get an auto loan / a secured loan.  Auto loans are given high regard from a creditors perspective.

-As soon as you can get two unsecured credit cards.

For the first card, put a small monthly recurring transaction on it - like your Netflix subscription, and setup auto payments so the balance zeros out every month.

For the second card, also use it every month and do not exceed 30% credit utilization (e.g. if you have a $10,000 limit keep your balance below $3,000).

One year may not be enough time.  It typically takes 2 years to establish good credit.

However, talk to several lenders.  Try a credit union if the big banks don't offer what you're looking for.  If you have a large enough down payment you may be able to get something right away.  Some lenders will consider credit you established abroad.  Ask and see if this is something they can take into consideration.

Depending on how soon you want to close, you may also find luck with a hard money lender who deals with people who are just establishing credit.