This is part III of the Mwalimu series, “Got the Green Card, now what?” These very short and helpful informational articles are for the benefit of those who are newly arrived in the USA with a Green Card or those who may contemplate getting the Green card some times in the near future. Previous articles are here:

Now, most people, coming from Kenya where it is traditionally difficult to get credit from any financial institution, get very excited when they hear about credit cards. Some jama cannot just fathom that “someone would give me so many $000s of dollars, free?”

Now a little background first. You must have heard of the so called “American dream”; flashy cars, top of the line SUVs, a Big home with Pool, new fashion every Season? Can these be yours, too? Of course. But if you are not careful, you may end up paying for it all your life, and dearly too.

There are two main methods to pay for this dream.

  1. Make your own money (and lots of it) and spend it and
  2. Get into DEBT.

Majority of people choose option 2, debt ( for better or worse ). To borrow, you must have a good credit rating. Your credit rating is everything. It is your credit worthiness. Here are some of the benefits of a good credit rating:

  • New vehicle loans at super low interest rates ( 0% is common ).
  • Home Mortgage with low interest rates (~5%-6% for 30 years. Compare with Kenya: 15%-20% for 15 years )
  • More Credit Cards with very low APRs
  • Store cards with very attractive terms ( e.g. pay nothing for 3 full years)
  • Personal Bank Loans/Lines of credit with very low interest rates
  • Quality apartments with no/low deposits
  • ALL the good stuff at an affordable pay back terms

How do you get a good credit rating?

  • Carry debt that you service promptly
  • Have many open credits that you pay at least a minimum on, regularly

In other words, to have good credit rating, you must carry some type of debt. Strange, but that is how it generally works here.

Now, i know, if you are freshly arrived here, you have no debt. That is good. But it is also bad; Bad because you have no credit ( i.e. you are fresh, and the system has no record of your debt paying ability ). So, you may not be able to really borrow for something significant (such as a new auto or a Home). So, you should start thinking of establishing a credit rating for yourself. This means, you should start borrowing. And that brings us to today’s topic of credit cards.

Do i need a credit card?

Yes (and a little no). Credit cards are one of the simplest ways to start a credit history. Others credit building ways include establishing a rental history and opening utility accounts ( power, phone, cable, water, etc ) in your name. So you should consider getting a credit card. There are many sources ( here are some source suggestions ) with various payback terms. You do not need any collateral to open a credit card account. That lack of collateral comes at a price, of course. The interest (APR) is a walloping x %, where x is normally > 20. If you are wise and not given to many temptations ( e.g. purchasing with the card what you have ready cash for- that is what you were doing in Kenya, right, paying cash?), you can actually end up with credit cards and pay 0% interest. If your accounts are serviced well, your credit rating will start to build up and you are on your way to better things.

Ways to maintain good credit rating

You can find more information from the credit bureaus (, TransUnion: and Equifax: ) on how to manage your credit rating. Generally, they will tell you to do three things to raise your rating:

  • Meet your obligations on time: Pay back as agreed and on time.
  • Meet your obligations on time: Pay back as agreed and on time.
  • Meet your obligations on time: Pay back as agreed and on time.

And they may be right. But remember, they also exist to serve the interest of the Financial Institutions that issue the credit cards. If you did not carry any debt, they would be out of business. Therefore, they are unlikely to offer you the best advice. Mwalimu, on the other hand, seeks nothing from you. :).

The Dummy’s Tips to stay out of Credit Card Debt

So, should you pass that point of “using the credit cards to establish credit history” and the creditors are now milking you badly, here are a few tips that can salvage you. Almost everyone knows that Credit Card debt is the worst kind of debt. Most people know how to stay out of this kind of debt:

Do not buy what you can not afford“.

Almost everyone who is not wise ignores this simple rule of thumb. But that is it, period. If put on credit what you are not immediately able to pay for in cash ( in at least within 25 days grace period ), may friend, you will have started on the slippery path of credit card debt. Remember:

If your credit card debts get out of hand and dent your credit rating, you are closing the door to the American dream you came seeking.

Also remember that

A bad report ( late payments, failed payments, etc)  in the credit file stays for 7-10 years.

So, assuming you get overtaken by credit card debt, let me repeat what you already know:

  • Buy your needs, not wants: Make a mental list of what are wants and needs. My self check that always works is: “Am i gonna die if i did not have this item?“.
  • Do no seek to have what others have: There will always be people with more stuff than you. And you will always have more stuff than other people. In fact, most likely there are 4 billion other people with far less than what you have. Some may tell you that this kind of seeking is ambition and progress. Most times it is plain greed.
  • Buy what you can afford: If you find yourself charging too many items, you are living beyond your means.
  • Do not MAX your cards: This shows up in your credit rating negatively. Shows you are a poor financial planner, hence you are a debt risk.
  • Pay off those cards: Remember the APR is really over 20% on most Cards. The Minimum payments are a way to keep you in debt for years and years. Do the math and you will see for yourself.
  • Avoid new Debt: Do not respond to those “PRE-APPROVED” “YOU DESERVE” offers from credit Card companies.
  • Carry Few Cards:You need Credit Cards for such items as Car rentals, Flight bookings, Hotels Bookings and those inevitable emergencies. If you have more than 3 credit cards, you may be walking the slippery path of trouble.

With just little common sense, you can avoid carrying too much of this type of debt, and with good planning, you will be on your way to living the American dream. Anything else, and you will be the pawn in other people’s dreams.

To read more, see here


Leave a Reply

Your email address will not be published. Required fields are marked *