Not necessarily a culture shock. It is more of a switch in systems.
You just landed in Canada / USA. All registerations completed. Settling down in school gradually. Then you start getting those letters to come apply for a credit card [secured mostly]. They then go ahead and dump a 100 page document for signing. Boom, you are hooked.
Back home in Nigeria, we run a cash base economy. You want a car — you will literally have to cough up the cash for it. You can take out a loan to buy the car of course but it is not the same thing as the credit system being run in these foreign countries.
[I] Credit Card : If you do not have a credit history [more on this later], the first step is to get a secured credit card. The bank will request you to bring cash [it could be as low as $250.00], then they give you a credit card. It simply means the credit they are extending to you is secured by the cash you are bringing to the table.
[II] Maintenance : The essence of credit being extended to you is to see how you can manage debt. [Another article will discuss good and bad debts].
Illustration > Assume you have $1,000.00 cash for a new iPhone. Your credit card is $4,000.00. You buy the iPhone with the credit card leaving you with a balance of $3,000.00. You then use the $1,000.00 cash to offset the debt on your credit card. **This is the way you should use your credit card. Always have the cash amount ready before using your credit card. If you do not have the funds, then it means it is really not worth it.
[III] Credit Score: Based on your usage [or even non-usage], a score is calculated in what is called cycles (most times a month). The credit score ranges from 300–850 [varies on some other platforms]. Whatever you do, ensure you make your credit whole before the readings. There are several things that make up your credit score —on time payments || oldest credit line || credit used || recent inquiries || new accounts || available credits. A blend of all the items listed are used to get your monthly score.
Lastly :
[IV] Uses of Credit Score: Your score will be used when obtaining debts. It will determine how high or low your interest rate will be. The econonmies of most countries are set up on debts, thus there will rarely be an item you can not buy using your credit card. Thus, except, you are Elon or Bill or Dangote, you will surely at some point need a credit score / credit card.
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I really tried to make this brief, but more on this is still coming. Inbox me to discuss more on Credit Card / Credit Scores —[Twitter] @PlugPortal .
