Hany Fam, Founder, and CEO of Markaaz tells us how you can develop American credit, both personally and for your business
When first moving to America, one of the biggest challenges new immigrants face is needing a US credit history, whether personal or business. However, to build a credit history and credit score, they must have access to credit; without a credit history, you cannot get access to lines of credit to build that credit history.
You need a US credit history to access lines of credit and apply for essential services, such as utilities, home or office rentals, insurance, and much more. Without a credit history, you are hamstrung.
“I’ve lived through this myself. When I first moved to America, my assistant had to turn the gas on in my house. I couldn’t even get the gas or the electricity turned on in my house because I had no credit history, even though I was an employee of a large company, they were sponsoring my entry into the United States,” noted Hany Fam, Founder, and CEO of Markaaz.
So how do you begin your journey to developing a credit history in America?
Markaaz’s top tips on starting your credit history journey
Before you can even get to the point where you can access credit, Fam says there are top things you must do:
- Make sure you get a Social Security card.
- Get your driver’s license. Don’t put that off whether you plan to drive or not.
- Open a bank account and get a card associated with that bank account very quickly.
- Do not start your credit journey with store cards to get credit. It’s the worst type of credit to get and will harm your credit score from the beginning.
- Leases and loans early on will harm your credit. They’re fine later, but that will hurt your credit early on.
Most people find it easy to get store credit because store credit cards have massively high-interest rates. So, they run loss ratios to give those cards out to anybody that wants them – and even people that don’t want them!
Get credit to get a credit history
You must start your credit history journey somewhere, and the easiest way to start is to get a personal credit card ASAP. Usually, the credit cards offered to new immigrants have an extremely high-interest rate. Because of these poor offers, many recent immigrants to America end up using the credit cards issued in their home country or the country they emigrated from. This is not ideal.
“Credit for new businesses is a real challenge, particularly for new immigrants. A couple of companies are working on transporting and transposing your foreign credit history into the United States. It’s early days for them, and some are thinking about it. However, most new immigrants won’t know how to find those companies,” explained Fam.
The best option for new businesses and new immigrants is a secured credit card, which several institutions, including Capital One and Citi, offer. Secured cards are where you pay the value of the credit line to the issuing company. They often have high interest rates and meager credit limits; for example, a $200 credit card with a 30% interest rate and you must pay the credit card issuer a $200 security deposit.
“Get a secured credit card, use it actively, and pay it off always on time. Keep using it. Proactively ask for an increase in your credit limit. Do that for a while. That will build your credit very quickly. Always pay on time,” said Fam.
Build your credit history
Using your credit card is essential to build that credit history, so as much of your spending as possible must be channeled through it. Everyday transactions you would usually use cash for – pay through your credit card and then pay the balance off immediately.
“One of the reasons we started Markaaz was because, after Covid-19, 40% of businesses didn’t have credit, and the owners likely struggled with their personal credit. We wanted to build an environment where we could show you what your credit looks like as a person and as a business. We want to help you build that credit and help you pay and get paid in a safe and secure environment that would support your credit profile in the market,” explained Fam.
Change your credit cards
Be bold and change those credit cards regularly. Once you’ve got one and used it for a while and put some volume through it, change the better rates and better fees quickly along the way. It’s okay to shop for those things.
“One of the things we’re looking to do at Markaaz is to access better rates and products by helping you clean up your business data and credit score. For instance, our relationship with Nav on the Markaaz platform lets you do that. It’s one of the key principles within Markaaz; Clean up your data, build your credit score and your profile on the platform, and you will be able to access better rates, better products, and a wider choice of products on the Dashboard. One of the things we’re hoping to have in place early next year is a shopping tool that says, based on my profile and my rates, what’s available to me!” said Fam.
When you apply for credit as a small business, many financial institutions will default to the credit score and the credit history of the individual or the business owner. This is because small business information is often inaccurate, outdated, or missing altogether – even for small businesses that have been in the market for years.
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Build better business information
The data for small businesses is lacking because most small businesses are paying zero attention to their data, which Markaaz is on a quest to change.
“As a business owner, pay attention to your credit score; it will probably be bad. Your data will probably be wrong. But you’ve got to start somewhere. You’ve got to find a trusted partner to help you clean up your data and who can hold your hand through the process of improving your business’s credit score beyond your personal score. We’re concurrently working with financial institutions to educate them about ways to get better data about small businesses so that they don’t have to rely on an individual’s credit score,” explained Fam.
Credit bureaus and data aggregation companies need better data on small businesses. They need a model that engages the end user to clean up their data and actively monitor changes in their data. They rely on historical data.
“I’ll give you a live example of the data available. I have my credit history through one service that monitors all three credit bureaus. I pay them every month to do that. The last credit bureau update on my credit was 220 days ago. That’s not good. But that’s the norm out there,” stated Fam.
Markaaz provides small business owners with the ability to correct and update their business information while also getting customized loans, credit and risk scores, and business management tools right on the Markaaz Dashboard. This makes your small business management and small business financial monitoring easy.
Hany Fam, Founder and CEO, Markaaz
Hany Fam is the CEO and founder of Markaaz and a transformational leader with a track record of building global platforms and businesses. He is an Official Member of the Forbes Business Council and a Member of The World Economic Forum’s Global Innovators.
Fam is focused on creating a positive and sustainable impact for small business owners through the world’s first global platform to verify and connect small businesses and the network of partners that support them. Before founding Markaaz, Fam held global leadership roles in business transformation, value creation, and technology, gaining depth of experience in payments, B2B platforms, enterprise partnerships, and SaaS.
He served as CEO of AXA Global Enterprise & Partnerships, Founder & President of Mastercard Enterprise Partnerships, and President of Mastercard UK & Ireland Markets. He also held roles in Applied Technology, including as the CTO of Toshiba International’s Heavy Industrial business in Australasia. Under Fam’s leadership, Mastercard Track was launched, the first and only global trading platform connecting every supplier and buyer on the planet to simplify and automate the exchange of payments and related data.