"Life is a journey, not a destination," you've probably heard before. While we all follow our own routes, many of us share a few bright spots along the journey, such as buying a house and getting married. On the other side, life can be full of ups and downs, such as divorce and unexpected job changes.
Whether it's good, bad, or bittersweet, life happens, and it's vital to evaluate the impact major life events might have on your credit and money. Here are six of them:
1) Inquiry at Home, Sweet Inquiry
When you borrow money to buy a house, lenders will typically pull your credit report from one of the three major credit bureaus. This is referred to as a "hard inquiry." Hard inquiries show up on your credit report and have the potential to lower your credit score. A hard inquiry after you've been approved for a house loan can cause your credit score to drop in the months after you've been authorized. However, if you pay your mortgage and other payments on schedule, your credit score will quickly rebound.
2) Instead of saying "I Debt," say "I Do."
You should learn about your significant other's credit relationship before getting married. When the two of you become "one," keep in mind that you're joining more than just various furniture types. Before you walk down the aisle, discuss your credit history with your future husband, as well as other important considerations like whether you'll merge accounts once you say "I do." You and your partner will be accountable for all debt accumulated on joint accounts once you've married. Your credit reports will remain separate, but missing payments on joint accounts can have a negative impact on both of your credit ratings.
3) Available for "Business"
Entrepreneurship is thrilling, but it also puts a strain on your finances. If you need a loan to start or grow your business, you should be aware of the implications for your credit. Consider the risk whenever you request a loan, especially if the amount is big. It is your responsibility to pay back the loan in a timely manner. Failure to do so may have a negative impact on your credit score.
4) Workplace
There are various ways that your credit can affect your ability to find new work or manage your money while unemployed. Many employers, particularly in the financial sector, may run a credit check before extending a job offer, so knowing what's on your credit report is crucial.
5) Divorce
Sometimes, relationships take a turn for the worse and end in divorce. Although you may part ways as a couple, you might still be committed to your joint accounts, such as credit cards and loans. Until your name is no longer associated with the account, you're responsible for making prompt payments. If you fall behind, you and soon-to-be-ex-spouse could suffer in the form of lower credit scores.
6) Leaving the workforce
Make sure your credit is in good shape before retiring, and attempt to keep your debt to a minimum. You should also keep reviewing your credit on a regular basis, as retirees are particularly prone to financial fraud.
It's impossible to know where life will take you, but it's always a good idea to bring excellent credit habits with you. Maintaining a strong credit profile might assist you in navigating the ups and downs of your journey.
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