The benefits that come with credit cards in the US are really, really nice, and you can’t do any of that without a good credit history. If you’re going to be living here for awhile, you never know when a line of credit will come in handy. As an expat living in the US, I wish such a guide existed to guide me on how to build my credit. This post is entirely written by me based on my personal experience, and I wish it was somehow sponsored to supplement my bank accounts a bit more so I can stop living like a graduate student.

Before we start, you should probably have some way of paying off your bills without a problem (otherwise, you’d have to weigh the benefits of APRs on different credit cards, and this guide doesn’t consider APRs). Also.. I’m assuming that you don’t have a spending problem :) in which case, it’s probably not a good idea to have n+ credit cards on hand.

Here we go–

(Last Updated 12/2022)

Prerequisites

• Get a bank account with a local bank. I landed in a city where there are no big-name banks (think Chase, BoA, Wells Fargo, etc.), but you should have a relationship with a local bank if you just landed. Go with Chase if you’re in an area where they service (this will come in handy when it comes to credit later), otherwise, just the most convenient local bank.
• If you just landed in the US and have some sort of paying job, you’re eligible to apply for a social security number (SSN). You must have an SSN in order to apply for credit. If you don’t have it yet, just revisit this guide once you’ve got an SSN.
• If you can, get a State ID as soon as possible (or a Driver’s License if you know how to drive and can take the test). This will be useful later in dealing with places that require a US ID (Barclays)

Build up your credit

The credit system in the US is derived from a variety of different credit tools, like loans and mortgages. It’s calculated out of 850, which is based on a weighted combination of 6 factors:

1. Hard Inquiries: Number of times you applied for credit (low impact). Each inquiry ticks off a few marks off your credit score and stays there for 2(?) years, so you don’t want to be blindly applying for credit cards everywhere.
2. Total accounts: Total open and closed accounts (low impact). They want to see 10+ accounts.
3. Credit age: Average age of open accounts (medium impact) ideally 5+ years, the higher the better.
4. Derogatory marks: Collections, tax liens, bankruptcies or civil judgements (high impact). The lower the better.
5. Credit card use: How much credit you’re using compared to your total limits (high impact). You want to range between 10% - 30%.
6. Payment history: Percentage of payments you’ve made on time. (high impact) You want this to be at 100%. However, if you miss your payment and pay it back within 30 days of the due date, it won’t register with any of the bureaus and you’ll be fine.

There are three credit bureaus in the US: TransUnion, Equifax, and Experian (the one that got hacked). They all calculate your score, they all have access to your info whether you like it or not. Your score can be available to you through various banks called FICO (Discover has this), and you can monitor your credit there.

If you just landed, you have zero credit history in the United States. You want to begin building your credit history up as soon as you can (See the part on credit age above), even though you don’t really need credit right now. There’s a variety of ways for you to build up your credit, but most of them are unattainable for a poor graduate student. You can do so by having phone bills under your name with a big-name carrier (AT&T, Verizon), or you can do it the traditional way, which I’ll talk about here.

Step 1. Secured card

A secured card is where you deposit $N of your own money, and the bank gives you a credit line of $N, and then you use it as a credit card as usual.

The trick here is that you should have at least 2 x $N, since you’re going to be depositing half and you are gonna be able to spend up to that amount. However, by US credit spending standards, you should not exceed spending more than 20-30% of your credit line – that means, have a credit line of $N, really spend 0.3 N. You also want to maximize $N, because at the end of the first year when your deposit refund is returned, $N will become your standing credit line.

Recommendation:

• Discover. This gives you 2% cashback on gas and restaurants and cashback match at the end of the year (that means really 4% back on restaurants). BONUS: if you’re a student, I think they give you a Good Student $20 cash back if your GPA is above a certain level.

At some point, Discover will refund you your security deposit (woohoo! unexpected money back!) and now you can move to step 2. This should take about 6 months to a year, depending on your behavior. Your credit score should be somewhere between the 650 - 730’s.

Step 2. Easy intro cards that have good benefits

Here’s where you can begin shopping around for cards, but you’re still limited. At this point, you want to look at where your max spending goes, and you want to apply for a card that will allow you to maximize rewards in that category.

• First thing you need to do, is change your Discover card to a Discover it Cash Back card. This is a 5% rotating category card, and you get 5% back in rotating categories each quarter.
• Second thing: Sign up for Credit Karma (or Credit Sesame) and monitor your credit!

Now, you’ll likely want to apply for a low-risk, no annual fee card. Some classic examples with targeted categories include:

• American Express Blue Cash Everyday 3% on groceries, 2% gas, $200 Bonus/$1000 Spend
• PNC Cash Rewards® Visa® Credit Card 4% back on gas

All purchases:

• Citi DoubleCash 1% when you purchase, 1% when you pay (effectively 2%)
• Capital One Quicksilver 1.5% back everything unlimited, $200 Bonus/$500 Spend

Notice how I didn’t mention any Chase cards on here, just because Chase is notorious for having their own credit rating system (not the listed 3) and one of their binary factors for approving/rejecting is “Have you had credit for at least two years?”. Although, if you’ve had credit for 2 years, I would recommend skipping straight to the Chase cards!!!

Step 3. Get to know a few more cards

After one of two of the above cards, you want to upgrade to a few more nicer benefit cards. Assuming you’ve had credit for one, one and a half years at this point, Here’s where you can look into having some nicer (annual fee) cards, or some other cards that may be harder to apply for.

Some nice no-annual fee, cash-back cards that I like:

• Chase Freedom Flex 5% back on rotating categories, 3% back on restaurants, 3% drugstores, all for no annual fee!
• Chase Freedom Unlimited 1.5% back everything, 3% back on restaurants, 3% on drugstores, also no annual fee!

Notice the benefits on these no-annual fee cards blows the other ones out of the water. Highly recommend.

Step 4. Graduate to some premium reward cards

At this point, you’ve had 2+ years of credit history, your score is comfortably sitting above 750+, and you’re looking to maximize your rewards. Most of the premium cards has reward in the form of miles, but if you don’t travel a lot, you might want to look into some other cards. Since you’re looking into a premium card, they usually have an annual fee associated with it. Some of the most talked about ones are:

• Chase Sapphire Preferred 3x back on dining worldwide, 3x back groceries, 3x back on streaming, 5x back on travel through Chase. Also, this card provides primary coverage for Auto Collision Damage Waiver so it’s amazing if you rent cars. 60k-80k bonus points which is worth a round trip to Europe! $95 AF.
• Chase Sapphire Reserve $300 Travel credit, 3x points travel dining worldwide, PriorityPass lounge passes, primary coverage for Auto Collision Damage Waiver, 50k bonus points, $550 AF. Even though it’s $550, you get $300 travel credit as soon as you book a flight with it, so it’s technically $250 AF. However, all the other benefits are the same as the Preferred.
• American Express Gold 4x back on dining, 4x back on groceries, plus an annual $120 food delivery credit, $120 Uber credit, 60k-90k points sign-up bonus (~$1000 in travel). $250 Annual Fee, although really $10 if you use food delivery/Uber. The bonus varies, but you tend to get a better bonus if you use the referral link.
• American Express Platinum Card is one that is comparable to CSR in the Amex family, but if you read the fine lines, it may not be worth it.

Cash back:

• Capital One Savor 4% dining & entertainment, 2% grocery, free Postmates Unlimited for 1 year, 8% back on Vivid Seats til May 2020, $500/$3k Bonus, $95 AF.

Travel:

• Capital One Venture X $300 annual credit, $100 global entry credit, 10k miles bonus every year, 75k miles sign-up bonus. $395 Annual Fee, but with lots of miles back, lots of fancy lounges, great travel card if you’re trying to maximize that domain!

Basically at this point you’re on your own for the rest of your credit journey! If you’re interested in churning, r/churning has an extensive wiki and a list of links, and I personally enjoy Doctor Of Credit as a straight-forward, no-bs blog on credit card updates.

Referral bonuses!

If you enjoyed this post and want some bonuses when signing up for credit cards, feel free to use my referral links! You tend to get better (and sometimes more) bonuses using referral links. Here’s a summary of the cards I mentioned that I would highly recommend. Click on the links to apply.

1. Discover It Cash Back 1st year cash back match, + an extra $50 through the referral link. No annual fee!
2. Capital One Quicksilver $200 Bonus/$500 Spend. No annual fee!
3. American Express Blue Cash Everyday $200 OR $250 Bonus/$2000 spend. No annual fee! The bonus will either be $200 if you sign up through the website, and $250 if you use the referral link.
4. American Express Gold 60k-90k points sign-up bonus (~$1000 in travel). The bonus varies, but you tend to get a better bonus than the public if you use the referral link.
5. Chase Freedom Flex $200 Bonus/$500 Spend + 5% grocery bonus.
6. Chase Freedom Unlimited $200 Bonus/$500 Spend + 5% grocery bonus.
7. Chase Sapphire Preferred 60k-80k Bonus (~$1000 in travel). The bonus varies, but you tend to get a better bonus if you use the referral link.