hi my name is mary welcome to my channel this is sort of a catch-all channel for all of the
useful information i wish someone had told me um in regards to a credit score essentially i avoided
this topic and i knew it was like sort of a good thing but i put it off all throughout college
and by the time i was a senior i was like i have great grades i went to a great school and
i actually have like a lot of investments and stuff like surely you will approve me
for a credit card i was very incorrect um i applied for my first credit card got rejected
and since then i've sort of figured out how to navigate the whole uh process and so that's what
i'm explaining in this video here so why does having a credit score or having credit matter
at all some people will tell you that all credit is really bad because then people get into debt if
you get into debt that is really bad but if you're responsible credit and credit score is so powerful
and it is so important as a student it may not seem like you run into it a lot in your day-to-day
day-to-day life but you will run into it a lot as an adult um in many ways so for example if
you want to apply for credit cards you need a good credit score or you need a credit score
if you want to apply to live somewhere like in an apartment and you want to get a rental lease if
you want car car insurance if you want a car loan if you want a mortgage like all of these things
will check your credit score and a couple other like points on why it's important the first is you
can do the math online i'm not going to do it for you but for really big numbers like for mortgages
even a small change in the interest rate which is how much you pay for that loan
makes a big difference in how much you're paying overall and if you have a better credit score then
that means you will have a lower interest rate and you will save yourself like tens of thousands
hundred thousands thousands you will save yourself a lot of money but you're probably not even in
that situation if you don't have a credit score at all like i did did not when i was an international
student then you literally can't get anything like you can't get a credit card because you won't pass
their application okay so how do you actually build credit as an international student
i would say the first and most common way is through getting a credit card so for example you
open bank account and then you apply and hopefully get a credit card now wait you might be wondering
i need a credit score to get a credit card and i'm getting a credit card so that i can build
my credit like how does that make any sense um it doesn't and the way to get around this problem is
i would say two ways so the first is if you have family in the u.s who is willing to have you as an
authorized user on their card then you can start building credit right away um that wasn't the
case for me that's probably not the case for most people so the second way which is the more common
one is you find a bank that specializes or has a specialty in doing student cards so for example
discover or capital one i believe have student cards i went with bank of america which they
don't have a student program in particular but they know how to give credit towards people
who have no credit history as a result of going this route you're probably going to get either a
a very low credit line or b a secured credit card a secured credit card means that your credit line
will only be as big as how much money you have at that bank with the bank so for example to get
a 300 credit line you'd have to have 300 with the bank so yeah that's probably the most common way
going the credit card route another route that you can take is if your name is on a lease and
you're paying rent um so for example maybe in the summer you're living off campus your name
is also on the lease you are paying rent you are paying utilities they report that to the credit
agencies so that is another way that you can start building credit and the third and final way
i don't know if i should recommend this because i've actually never tried this myself but i know
there are credit builders i would just google that and essentially what they are is you pay
them a very small amount like ten dollars a month they loan you like ten dollars a month you pay it
off every single month and that's the way that you start building credit so that might be an option
um so yeah those are the three ways in which you can get a credit score having no credit history
and then uh next we're going to go through how you actually increase your credit score
okay so fourth now we're gonna talk about how you can actually increase your credit score
once you have one so the benefit of being young in terms of personal finance stuff is that time
is in your favor with time and with paying off your bills in full every single month that is
going to be the number one thing that improves your credit score over time also just by virtue
of having credit and them collecting data on you over months and then years that is going to
improve your credit score as well also with time there's a good chance you're going to get a better
mix of credit so for example you might start with credit cards and then you might have your name
on a lease and then you might get a car loan or things like that and having that different mix of
credit will improve your credit score and then my final tip which is actually the most proactive one
beyond paying off your bills and stuff is that every six months to a year-ish you should ask
for an increase in your credit limit on your existing you know credit lines or credit cards
or you should apply for new ones that is a whole different topic on like which credit card to apply
to and how you do the rewards and stuff like that but the reason why that's important is because
it decreases your credit utilization which is how much credit you're using compared or over
how much credit you have access to by decreasing that you'll increase your score and all this
happens just with time okay so now let's actually deep dive into like what composes
your credit score therefore how do you make it better um i think actually one of the best
things to visualize this is if you create an account with mint mint is a free budgeting
tool that has an app as well as a desktop version what you should do is you should
actually like enable the credit score feature and then if you use the desktop version it explains
not only what your credit score is but also what the components are specific to you
um anyway so how they actually calculate your credit score is fairly complicated but
according to fico or the internet the way that it breaks down is about 35 is your payment history
about thirty percent is i'm looking here because that's where i kept my notes about
thirty percent is your credit utilization about fifteen percent is your credit history length
about ten percent is your credit mix and about 10 is your new credit so i'm gonna explain each of
those terms going from what i think is like most complicated to least complicated or most useful
to explain so in terms of credit history don't be like me and think like i'm a great stand-up
citizen or something like i should probably be able to have a credit card because they don't care
and they don't look into that stuff credit history is something that you just have to start having
credit and then wait on for a very long time in fact to get some of the best scores which is over
800 those people on average have had to wait seven plus years or they've had seven plus years of
credit history in order to get to that score um so that is why if you are an international student if
you can be a freshman get credit as early as you can and then just wait you will already have four
years of credit history by the time you graduate instead of being a silly billy like myself
credit mix just means having different types of credit helps your score so not just having
credit cards for example but also having maybe a student loan or personal loan or you know a rental
history or utilities bill stuff like that having a better mix slightly improves your credit score
in terms of payment history this is just about do you pay your bills on time i think the best way to
make sure you do this is set up auto pay which means set up auto pay with your
credit cards such that every single month you pay the full balance on time you just said it
you forget it and you will never not pay a bill i'm actually going to make a video i
think on explaining different parts of a credit card statement because it's actually incredibly
complicated like weirdly complicated but that is for another video in terms of credit utilization
this is just how much credit you currently have extended so how much you're currently
using divided by how much credit you have access to so for example if you have a thousand dollar
credit card limit and you've spent 100 then you your credit utilization is currently at 10
now they generally suggest that you keep your credit card utilization or credit utilization
below 30 and something to note is that these agencies actually randomly throughout a month
check your account what i mean by that is they don't actually do it on the same day every month
and so if you're bumping up towards like a higher credit utilization i personally
just pay off that bill even if it's not you know autopay or even if it's not the end of
the month because i know the credit card agencies are checking and i don't know what day they check
and finally this last piece is called new credit so what happens is when you apply formally for
new credit they do what is called a hard credit poll this is as opposed to a soft credit poll
a soft credit poll is when they track your credit score but they don't report this to the agencies
a hard credit poll is when they check your credit score and it gets reported to the agencies and it
becomes part of your credit report this will ding your score by a few to like a handful of points
for a little bit of time the reason for this is like if you think about it from their perspective
if you're like applying for one credit card and then applying for another credit card really
soon like within six months or something like that they think that you might be getting desperate and
why do you need so much credit and so that's why it lowers your score but this heals over time
so that was an overview of how international students can start
building credit the tldr is that you want to start as early as you can
sow that and be responsible so that time can be in your favor i wish when i was a freshman
i saw this video i followed the steps because your future self will thank you for this in the future
if you liked this video please comment oh my god what is it please like subscribe and comment below
any tips you have any other questions you have any clarification or other topics you'd love me
to you'd like me to cover that would be that'd be great see you in my next video next week