Many of life's major changes can impact your credit, but these credit-savvy tips can help you keep and build your credit, so it's always available when you need it.
Your Marriage and Future
Getting married brings many financial opportunities to couples who can combine their resources. As you plan your wedding day, plan for your future and take these steps to keep your credit in tip-top shape.
- Notify creditors and credit bureaus if you change your name. When you change your name at marriage -- or any other time -- it's important you make sure your creditors and credit bureaus are notified of the change. Otherwise you might lose your credit history.
- Keep credit in your name.
Women especially must take care to keep some credit in their own name. (e.g. "Jane Smith" rather than "Mrs. James Smith"). Every year, women who have never paid a bill late are denied credit because they have no credit history in their own name. If either you or your spouse-to-be has had trouble getting credit alone, try setting up a joint account to capitalize on your shared income and/or one person's stronger history. As your joint account history grows, you should each acquire and maintain an account of your own as well to establish your credit on an individual basis. As you establish individual accounts, you might close some extra joint accounts, keeping only those you actually use.
Buying a Home
The financial rewards of owning a home are extensive. When you own your home, the monthly payments become part of a savings plan. When your home increases in value over time, you can use the equity for other major purchases, or turn it into cash by selling it, without worrying about interest on the purchase. When it comes to how much you can afford, that's for the lender to decide. The lender will consider how much you have available for a down payment, and then calculate your debt payments, income, and credit history.
Buying a home -- especially for the first time -- makes significant demands on personal credit. It requires a solid credit rating, and once it takes place, it can dramatically change some credit dynamics. On the other hand, homeowners build equity -- an asset that contributes to their net worth -- with each mortgage payment. They also establish another level of credit history and stability by making their mortgage payment on time. On the other hand, a mortgage is a large loan, and may impact things like your debt-to-income ratio in the first years of the loan.
Starting a Family
Beginning a family is another life change that puts demands on your finances. As many soon-to-be parents find out, bills can quickly pile up as they prepare their homes and lifestyles to accommodate a newborn. Nevertheless, it's more important than ever to avoid overextending your credit when you start having children. That way you know your credit will be available when you need it -- like 18 years later -- when those tiny infants head off for college.
Divorce
If you're faced with divorce or separation, you encounter many new challenges. One is determining how to separate your finances, including your debt and credit relationships.
Although, even in good times, many couples find it hard to talk about financial issues, it is essential you communicate about credit during a divorce. Ask yourself these questions:
- Can we put our differences aside and talk about the financial issues of our separation?
- How can we make as clean a financial break as possible?
- Can we analyze our debts and determine between ourselves who will be responsible for what?
When couples are going through a divorce, they must remember that for joint accounts, both are still responsible for paying debts to the creditor.
- A divorce decree does not change the legal contract you and your former spouse made with creditors. You must arrange with creditors to change responsibility.
- Keep paying bills to preserve good credit: even if it's your spouse's debt, it's still your credit rating.
The Death of a Spouse
If your spouse should die, a creditor cannot automatically close or change the terms of a joint account. In some instances, a creditor may ask you to update your application or re-apply. This can happen if the initial approval was based on all or part of your spouse's income, or if the creditor has reason to suspect your income is inadequate to support the credit line.
Once you re-submit an application, the creditor can determine whether to extend your credit or change your credit limits. While your application is being reviewed, you are still allowed to use your accounts without any new restrictions. The creditor has 30 days to give you a written response to your application.
A 3-Agency Credit Report Can Help You Handle These Changes
The triple merged 3-Agency Credit Report includes comprehensive information that can help you prepare for significant changes or major purchases. By double-checking that ALL bureaus' information is accurate, you can make sure your credit will work for you in times of change. The CreditMatters 3-Agency Credit Report costs just $36.95. To order, simply click on the link below or call toll-free 1 (888) 888-8559 and ask our Customer Service Representative for a triple merged 3-Agency Credit Report.