Whether you are moving because it’s an upgrade to go along with a higher salary, or simply a change of scenery, many of us love to hate moving – and do so frequently. But between asking around for free boxes and trying to comprehend how you’ve acquired so much stuff, watch out for your credit! Here are three ways moving could impact your credit score and how to deal with them.
1. A credit check will initiate a hard inquiry.
When you apply for a new apartment, your apartment management company will likely pull your credit to see whether you’re responsible with money. This will trigger a hard inquiry, which can pull down your credit score a few points. Hard inquiries remain on your credit report for two years and affect your credit score for one.
Because of the minor impact of a hard credit pull, it’s generally not a huge concern. However, if you’re initiating multiple hard inquiries each year, you could hurt your score more significantly. Hard inquiries may include: applying for credit — such as credit cards, mortgages, and loans, or applying for a service that requires financial responsibility, such as a cell phone.
Solution: To keep your credit score from suffering multiple inquiries, you should limit your annual credit applications and take advantage of rate shopping when possible. This will keep your inquiries low and your credit score high.
Need to get your credit score in check? Try First Financial’s First Score Program, a low cost, interactive session ($30) with a First Financial expert, which simulates your credit score with various “what if” scenarios. You can email us at email@example.com or call 866.750.0100, Option 4 to get started.
2. Bills that go to your old address may go unpaid.
A new study released by the Urban Institute states that over 1/3 of Americans have an account in collections. But what does this have to do with moving? An account can easily end up in collections because it isn’t forwarded correctly, instead being sent to an old address. There are two easy things you can do to prevent such a mix-up.
Solution: First, change your address with the U.S. Postal Service before you move. It will forward your mail to your new address for one year. By that time, you should have your address changed on all of your accounts. Remember to update your address on your accounts as soon as possible.
While you’re updating your address, you may also want to enroll in paperless statements and automatic bill pay. In an increasingly paperless world, it’s best to handle your financial dealings electronically. If you don’t want to use auto pay, have statements sent to your primary email so you can pay them before the due date.
First Financial members can take advantage of our free Online Banking and enroll in e-statements. Online Bill Pay is also free, if you pay at least 3 bills online per month – otherwise a $6 monthly fee applies. Learn more about how you can self-enroll in Online Banking today!
3. You’re putting too many moving expenses or new purchases on credit cards.
Moving can be expensive. Between paying for a moving truck and covering your security deposit and first month’s rent, it may be tempting to put moving-related expenses on credit cards. This is all well and good, but only if you have the funds to pay off your credit card in full before the due date to avoid accruing interest.
It’s also easy to fall into the trap of charging new items for your home. After all, new digs require new furniture, right? Wrong! Unless you can reasonably pay for your new purchases, resist the urge for now.
Solution: Save money well before your move-in date to cover all moving-related expenses. And in the case of buying new things for your new place, purchase the decor of your dreams slowly as you have the money. Your home shouldn’t be a source of stress, so make sure it isn’t filled with things that are hurting your finances.
If you do need to put some moving expenses on a credit card – be sure you are using a low-rate card like First Financial’s Visa Platinum Card, which also has no balance transfer fees and no annual fee.*
Bottom line: Moving can hurt your credit score, but only indirectly. To keep your credit from being damaged by your upcoming move, avoid getting too many hard inquiries in any given year, change your address with the USPS and switch to paperless billing, and try not to buy anything moving-related or otherwise that you can’t pay for before your credit card due date.
*APR varies from 10.90% to 17.90% when you open your account based on your credit worthiness. This APR is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. No Annual Fee. Other fees that apply: Cash advance fee of 1% of advance ($5 minimum and $25 maximum), Late Payment Fee of up to $25, Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount, $5 Card Replacement Fee, and Returned Payment Fee of up to $25. A First Financial membership is required to obtain a VISA Platinum Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.
Article Source: Nerdwallet.com