With schools out for the summer, more people feel free to make a move. If you’re house hunting, you’ve got a lot on your mind already, but you still need to be thinking about how moving might affect your credit. Whether you’re relocating for work, upgrading into a bigger home or downsizing to save money, your move will certainly show up on your credit report in several ways.
Because moving is such a major (read: financial) initiative it has widespread reach, both small and large. First, the change of address will appear on your credit report. Most people don’t move very often. In fact, too many address changes over a short time frame could adversely affect your credit score. Second, if your move is work related and you switch employers that change will also appear in your credit history. Length of time with a current employer is one of the factors potential lenders consider when deciding to loan you money. While none of those factors will necessarily lower your credit score, other costs associated with moving potentially could.
More often, it’s the overall expense of moving that will impact your credit score. Whether you rent or buy, moving often requires a credit check, either by a mortgage company or a landlord – both of which are considered “hard hits” on your credit report. Too many inquiries in too short a period can affect your credit score.
The cost of the move, whether it’s for the truck or down payment, could cause you to rely more heavily on credit than you normally would. This increased use of your credit cards could deplete your credit utilization ratio, thereby reducing your score. If you can’t afford to cover all your moving expenses and make late payments or fail to pay on some of your accounts that will also affect your credit score. Finally, if you move into a bigger house and find the mortgage payments are so high that you ultimately default on your loan there will be a huge impact on your credit.
Many of these potentially credit-altering circumstances will be beyond your control, so focus on what you can influence. Continue to pay bills on time. Avoid lost or delayed bills by alerting all your creditors to your address change, or by going paperless and having bills e-mailed to a generic account that you can take with you from place to place. Pay down balances quickly and be honest with yourself about what you can afford.
One more important financial point about moving: If you move for a job and incur moving expenses over what your employer will reimburse you for, those expenses may be tax deductible. Consult with a tax professional to see if you qualify for a deduction.