The Social Security number, also known as an SSN, is one of the most valuable numbers you have in America . You use it to file taxes, you need one to work and it tracks your credit score and credit history. The Social Security Administration (SSA) issues SSN’s depending on your status in the United States, so not everyone has one, but if you DO there are a few things you need to know.
Your SSN is linked to your credit history and credit score, and companies report to the credit bureaus (there are four major ones – TransUnion, Experian, Equifax and Innovis) that you have applied for a loan or card (approved or not), that you’ve defaulted (or not), how many credit cards and accounts you have and many other things. If you have a low credit score it can really start to negatively affect your life here in the US.
The credit score ranges from 300 – 850.
- Between 300 and 499 – Bad credit score.
- Between 500 and 579 – Poor credit score.
- Between 580 and 619 – Low credit score.
- Between 620 and 679 – Average or OK score.
- Between 680 and 699 – Good credit score.
- Between 700 and 850 – Very good or excellent credit score.
As a new immigrant to the US, you will typically have no credit score and no credit history, and there is no way to bring your history from Australia. It is extremely important that you start building your credit score and credit history as soon as possible. There are a few way to do this. The most popular being:
- Have an American spouse or parent put you on their credit card (referred to as “piggy-backing”) bearing in mind you get their good AND their bad
- Get a secured credit card (Capital One has a good one)
- Get a store card (some stores are really strict so don’t be discouraged!)
Your credit score determines things like getting a car or home loan with a lower interest rate, being eligible for store cards and credit cards, whether you need to pay a larger security deposit for an apartment (called a bond in Australia), how much your car insurance premium will be, even as far as whether the electricity company will let you get connected without a deposit first. It has been reported that some employers will even checking your credit history to see what sort of person you are and determine whether they want to hire you.
Things you need to watch out for that will lower your score (aside from debt) are nicknamed “hard hits” (or hard inquiries). When a bank, credit card company, or other potential loan originator makes an inquiry on your credit score they can make either a hard inquiry or “soft hit” (or soft inquiry).
A soft hit is when someone checks your credit when there is no intention on your part to borrow money, such as when you pull your score or history to check your standing (always a good thing to monitor your history and score to protect yourself against identity theft). A hard hit conversely shows intent to borrow money. The hard hits don’t hurt your score by a large amount, but sometimes this can be the difference between a “good score” and an “average score”. When you apply for multiple car or home loans within a relatively short period of time (around 14 days) most agencies will only view this as one “hit” to give you the chance to shop around for the best deal.
There are companies out there who claim they can monitor your credit score however many often erroneously report to the credit bureaus that you are a victim of identity theft and put a “fraud alert” on your account which in itself can damage your history.
In short – build your credit history and credit score and protect your SSN. Your SSN is “you”, and that is why you must keep your SSN safe because with your SSN identity thieves can do a lot of damage.