America’s credit system is a model for the rest of the world. In some cases, credit is even available to foreign nationals in the United States. Despite the abundance of bureaucratic details, it is mostly convenient and quite profitable. All you need to do is to gather all the necessary documents and learn the details of the process. Credit in the USA: general information.
In the States, a fundamental characteristic of a borrower is a credit history. In order to open a credit account in the USA you need a social security number. This number is the key to all personal information about a person. In particular, it can be used to find out a person’s credit history. Factors that influence a person’s credit history: Percentage of credit use. Payment history. Penalty marks. Period of credit history. Number of open accounts. Number of credit history inquiries. This score ranges from 300-850 points, a sufficient score starts with at least 650 points.
Types of loans in the U.S.
In 2020, the following bank loans are common in the United States:
- Getting a mortgage loan. The average percentage across different personal loan programs is 3-4%.
- Getting a consumer loan. Based on the reputation of the borrower, the interest overpayment of a consumer loan is 6-18%. If you consider the rates of common cards, on average, it is 7-8%. Cash disbursement is not practiced, the funds are provided to borrowers by crediting to their card.
- Auto Loans. They are especially lucrative in the United States. Popular car models in the States sell with an interest rate of up to 1 percent with full repayment in one year. The rate goes up to 4 percent if the repayment period is longer.
- Bank loan for your education. This type of loan is extremely common. Americans believe that financial prosperity is unlikely without an American college education. This type of loan is low-interest, with no interest rate of 8 to 10 percent, and does not include scholarship programs.
- Getting a business loan. Such a loan from an American financial institution requires a paperwork showing that the business is reliable and profitable. Before taking a loan, the client will also have to provide a detailed description of the income scheme.
- Direct Lenders. make loans directly, and so the money you receive – comes from the lender. Direct lenders review your loan application and – if approved – lend you the funds.
Fixed or floating rate
Speaking of interest rates in the U.S., we should clarify the differences in the concepts of these rates, using mortgages as an example. Floating interest rates are not beneficial in the long run, but are indispensable for those who plan to sell their purchased property in the near future. Instead of paying 3% interest for 15-20 years, a person can choose a higher rate and pay off the loan in 2-3 years. The fixed rate is more suitable for people who are not going to leave the country, while the floating rate is popular with investors, agents and temporary residents.
