Many of
life's major changes can impact your credit, but keeping
these credit-savvy tips in mind 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 too and take these
steps to keep your credit in tip-top shape.
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Notify creditors and credit bureaus if you change
your name. When you change your name at marriage--or any other
time--it's important that you make sure your
creditors and the credit bureaus are notified of the
change. Otherwise you might lose your credit
history.
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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. It does this 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, and not
have to worry 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. Make sure when applying for a large loan you check
your
credit report, to assure yourself
that it's free of any inaccuracies that might hinder
your loan process.
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 the 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 from now 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 that you
communicate about credit during the divorce. Ask
yourself these questions:
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Can
we put our differences aside and talk about the
financial issues of our separation?
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How
can we make as clean a financial break as possible?
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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 their
joint accounts mean that both are still responsible in
paying their debts to the creditor.
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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.
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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
continue to extend you credit or to change your credit
limits. While your application is being reviewed you are
still allowed to use your accounts without any new
restrictions. Within no more than 30 days of receiving
the completed application the creditor must give you a
written response on your application.
A 3 Bureau Online Credit Report can help you handle these
changes.
The triple merged 3 Bureau Online 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.
Mortgage Glossary10
