Starting a new job can be both stressful and exciting. You’ll probably rely on a combination of education, experience, skill and dedication to succeed in your new role. The last thing you want to do is dilute your focus by worrying about your credit score, right?
You don’t have to worry that changing jobs will drag down your credit score, but you should be aware of how your employment history affects your credit overall.
Job changes may appear on your credit report, but they are not among the criteria credit bureaus use to calculate your credit score. That means leaving one job and starting another won’t directly influence your score.
However, a new job may affect your credit in other ways.
Hopefully, your new position comes with a pay increase. Boosting your income could make it easier for you to pay your bills. Payment history greatly affects your credit score. A history of reliably making on-time payments looks good on a credit report and positively impacts your score. Late or missed payments can lower your credit score. If you’ve been unemployed, you may have had trouble keeping up with your bills.
While your income and job history don’t appear on your credit report, when you apply for new credit, lenders will want to know how much money you make and how long you’ve been at your job. Increasing your income by changing jobs could make lenders view you as better able to take on new debt.
New debt, if used wisely, can actually help improve your credit score. For example, opening a new credit card account will increase your amount of available credit. If you avoid maxing out that card, your ratio of credit used to credit available will improve. That ratio is one of the factors that figures into your credit score, so improving it could positively impact your score.
Keep in mind that frequent job changes won’t look good – on your resume and on any credit applications you might fill out. Changing jobs too often may make future employers and lenders question your reliability.
And remember: No matter what job you do or how much money you make doing it, using credit wisely will play a key role in your long-term financial health.