Moving? Don’t Ignore Your Credit
Whether you’re moving halfway across the world or just down the street, don’t send your credit score packing. Particularly when life is in flux, it is important to ensure that the stress and commotion that comes with a big move doesn’t take a toll on your creditworthiness. Here, personal finance advisors and credit experts share concrete steps you can take to maintain and even improve your credit score while you’re busy packing (and unpacking) boxes.
Have your mail forwarded. Visit your local post office or log online to www.usps.com to fill out the appropriate change-of-address form. “While time-consuming, it is important to make sure and notify all creditors of the address change, preferably before the actual move so that any bills are sent to the new address without delays,” advises national credit and debt expert Kevin Gallegos, vice president of Phoenix operations for Freedom Debt Relief, LLC. “Otherwise, it is easy to miss a bill due date – or miss the bill entirely if it goes to an old address.” This is key because on-time payments are the most important factor in developing good credit, accounting for 35 percent of your credit score.
Hold off on buying furniture using store financing.Avoid having your credit report pulled by multiple sources, such as mortgage lenders, auto dealers, and furniture stores, since this can have a negative impact on your credit score, says Carole Peck, a financial advisor and owner of the Florida and Illinois-based Carole Peck Financial Center, which focuses on helping people in transition plan for the next stage of their financial lives.
Start using online bill pay. Soon after moving into a new home, you’ll start to receive an assortment of new bills, including electric, gas and water, as well as Internet, cable, and phone. Those who have been through a move often “have their schedules uprooted enough to lose track of regular monthly bills,” says Gallegos. Online bill pay, which is often provided free with a checking or savings account, can help. In addition to saving 44 cents, tracking and paying bills electronically will also give you a handy record of which bills you’ve already paid. This is especially important since many utilities providers now report payment histories to the credit bureaus.
Avoid maxing out your credit cards. The expenses incurred when moving usually extend beyond the moving van – ranging from a shopping spree for new household appliances to costs incurred in painting and sprucing up the new home. “People often find themselves pulling out the credit card too often and ending up with debt they cannot pay off in full each month,” says Gallegos. Avoid maxing out your credit card by creating a budget that takes into account all of the expenses involved in moving. A credit card utilization ratio of more than 35 percent (such as charging $2,100 on a credit card with a $6,000 limit) is considered high and can negatively impact your credit score.
Don’t cancel old credit card accounts. “When people move, they sometimes think it is a good time to ‘start fresh,’ and cancel accounts,” says Gallegos. “However, think twice about canceling a credit card with a long (positive) history.” That’s because the longer you hold a card, the more valuable it is in your credit score determination. Carry only one credit card in your wallet; stash the other cards in a safe place. If need be, freeze the cards, put them in a safety deposit box or store them at a parent’s home.
By following these tips, you’ll rest easy in your new home, with the knowledge that your credit score didn’t get left behind in the big move.