Relocation is stressful enough, so minimize the risk to your credit
When relocating, you’re more likely to make changes to your credit — and more likely to foul it up, too, unless you’re careful.
But there are ways to keep your credit and debt running smoothly before, during and after a move.
Moving often means credit changes
A 2006 study by Forrester Research suggests that moving is also a time when people need an extra infusion of credit. It’s not hard to understand why: Moving often accompanies life-changing events, such as going to college, getting married or divorced, to seek a fortune or recover from one lost.
According to Bruce Temkin, vice president, and principal analyst at Forrester, consumers who applied for a credit card were more than 50 percent more likely than average to have moved in the past 12 months.
Stop and start automatic payments
The stress of a move — from packing the boxes to finding the nearest grocery store — can mean important details get lost in the shuffle. “Your brain can only keep track of so much at a time,” says Liz Weston, author of “Easy Money.” “That’s why you lose your keys, you forget your purse, or you forget to pay a bill.” That’s more than just frustrating: A single missed payment, if reported to the credit bureaus, will knock points off your credit score, making loans for a home, car or anything else more expensive.
To keep absent-mindedness from wreaking havoc on your finances, put bills on autopilot. “Set up automatic payments with your cards for at least the minimum payments,” says Weston. “Even if you forget, at least that minimum is being paid, then you can go back and pay the rest later.” Almost any bill can be paid automatically these days, and that’s an especially valuable service during the months before, during and after a move. Take advantage of these services for the months before and after your move, even if you don’t plan on keeping them forever.
While setting up automatic payments, review old bills to determine which you can drop. Shed automatic payments charged to your checking account or credit card that you won’t use after a move. Common automatic payment categories include:
• Gym membership.
• Local newspaper delivery.
• Satellite TV.
• Internet service.
Be sure to cancel them. Call several weeks in advance to make sure you’re not charged for a month or two beyond your move.
Organize and protect your credit
A postal change of address form from the post office will help get your mail to you, but for important financial matters, such as credit card bills, be proactive. Before your move, change your address through their online sites or by phone.
Keep your financial records together when packing and be sure they’re with someone you trust on moving day: yourself. Moving that information yourself ensures that important documents don’t get into the wrong hands. Have to entrust your statements and records to someone else? Do your homework, says Kay Lynn Clay, manager of business development at U-Pack. “If you’re using a moving service, see what type of security options they offer,” she says. “And if you’ve got your old tax returns and credit card statements in a box, you probably don’t want to write ‘Financial Records’ on the box if someone else has access to it.”
Clay also suggests creating a master list of phone numbers and Web addresses to have with you during and after the move. It should include bank and credit card phone numbers and Web site information so you can get in contact with them quickly if you misplace something or if you haven’t seen a bill you’ve been expecting.
Add and drop credit cards wisely
Even if you do almost everything yourself, moving can cost a bundle. Applying for a new credit card or store card — especially those from Home Depot, Best Buy or Target, which may offer a one-time discount for the products you’ll need for your new pad — may be tempting.
Don’t get carried away, says Kim Lankford, a contributing editor at Kiplinger’s Personal Finance magazine. “If you take out a lot of new credit all at once, it could hurt your credit score,” she notes. “It can bring down the average length of time you’ve had your credit cards, and it will add a lot of activity [to your report], which may affect your score.”
Similarly, it may be enticing to close the store cards and accounts from a nearby credit union or local shops if you don’t plan on using them after the move. It’s fine to drop them, says Lankford, but begin that process only after you’ve secured your home financing and don’t close them out all at once. “If you close out your accounts, but maintain the same overall balance, that will affect your credit utilization ratio,” she says. Stagger out the closures over several months, Lankford says, since closing accounts can do short-term harm to your credit score. Be sure to keep your oldest accounts open; a long history of on-time payments improves your score.
Moving your financial life to a new home requires the same care and attention as moving a fragile vase or an expensive TV. Take the right precautions, and everything will get transferred safely.