How Major Life Events Impact Your Credit

They say time is money, and when it comes to credit history, this is definitely true. A credit report is a record of your financial actions, and it is also a record of your life—the places you’ve lived, the items you’ve purchased, and the ways you’ve spent your time. Most major life events—whether positive or negative—affect your credit report, some more than others. The following major life events can have a profound impact on your credit:

Marriage: Marriage opens up financial opportunities because you can pool your money, but it also brings on new responsibilities that can affect your personal credit and your credit report.

Consider the following:
  • Name change: If you change your name, you should notify both your creditors and the credit bureaus. Otherwise, you could lose your credit history completely.
  • Joint credit: Even if you plan to join financial forces with your new spouse, it’s a good idea for both of you to keep individual credit in your own names. If you decide to link credit with your spouse, keep in mind that you are responsible for all of his or her bills as well as your own.

Divorce: If you are in the midst of a divorce, be sure to contact your creditors and credit bureaus in order to protect the integrity of your credit report. These agencies will record your new contact information to help separate your financial transactions. Also, if your ex-spouse is disgruntled, secure your mail so he/she cannot steal items such as approved credit card applications. It’s also a good idea to speak with an attorney about closing joint accounts and paying off balances in the event of a divorce.

Buying a home: The purchase of a home, particularly if you are a first time home buyer, affects your credit report both positively and negatively. For one, it helps you build equity and adds to your net worth. But on the other hand, a mortgage is a huge loan that substantially increases the amount of debt on your credit report.

Having a baby: With children come significant financial demands, and therefore, new demands on your credit. Your expenses will increase after you have a child, and you will have to start using your credit wisely in order to plan for college in 18 years.

Death of a spouse: If you share a joint account with your husband or wife, a creditor cannot change the terms of the account if your spouse dies. Instead, you will most likely be forced to reapply in your own name. If you haven’t established sufficient credit yourself, you may be turned down. So it’s important to maintain some form of independent credit throughout your marriage.

A lost job: If you lose your job, be sure to inform your lenders and credit card companies immediately; they may be able to help you achieve reduced payments while you are in between jobs.

Whether or not you are currently facing a major life event, you are likely to face one in the future. Obtaining a copy of your credit report can ease financial burdens that may arise during life-changing times.

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