How to Protect Your Credit Score During a Move

When it comes to moving, there are lots of things to keep track of. Whether you are moving across the country or down the street, the process of packing up everything you own and toting it somewhere new is often a challenge.

Although moving is often a monumental physical challenge, it’s also an exercise in juggling other parts of your life while your home is in an inevitable state of disarray. Your credit scores are one of the many things that you need to stay on top of during a move.

The good news is that it’s absolutely possible to protect your credit scores during a move. But it will take a little bit of planning to make sure that credit score-damaging issues don’t slip through the cracks.

Let’s find out how to protect your credit scores during a move.

How Moving Can Impact Your Credit Scores

A new address won’t directly impact your credit scores. But the process of moving could lead to a negative impact on your credit scores due to credit checks and big expenses.

Here’s a breakdown of how moving could negatively impact your credit scores.

Credit Check for a New Apartment

When you are looking for a new apartment, there are lots of variables at play. You’ll have to decide which one of the many apartments on the market best suits your needs.

During the application process, most apartment complexes will run a soft credit inquiry to evaluate potential renters. After all, the landlord wants to make sure you have a track record of paying your bills on time. Fortunately, a soft inquiry will not affect your credit scores.

However, some properties may conduct hard credit pulls on prospective tenants. A hard credit inquiry has minor implications for your credit scores. Typically, this will only pull your scores down by a few points. However, the impact of hard credit inquiries can add up if you are applying for multiple forms of credit and moving within the same year.

Extensive Financial Checks for New Homeowners

Not all movers are calling an apartment home. Some movers are choosing to put down roots as brand-new homeowners. Although owning your home often marks the start of an exciting new chapter, it’s also a major financial commitment that has an impact on your credit scores.

During the closing process, the mortgage lender will often run a hard credit check. As with apartment dwellers, this credit check can have a minimal impact on your credit scores. But if you are taking out a mortgage, you are likely taking on an extensive amount of new debt.

Since a mortgage is an installment account rather than revolving debt, the new debt won’t necessarily have a big impact on your credit scores, unless you are unable to make on-time payments to this new debt obligation.

Missed Bills

Most of us have several different credit accounts. In some cases, these bills still show up in the form of a paper envelope on a monthly basis. It’s easy enough to take care of a physical bill payment when you get one in the mail. But it’s impossible to tackle a paper copy of a bill if you never receive it.

When you move, the possibility of missing a bill payment rises. It’s all too easy for a bill sent to your old address to go unpaid accidentally. After all, if you don’t know about the bill, there’s no way to make an on-time payment.

Since payment history is the most important factor in your FICO scores, missing a payment can severely negatively impact your credit scores. If a bill slips through the cracks while you are moving, it can make a significant dent in your credit scores.

Moving Is Expensive

The process of moving can get expensive quickly. According to Forbes, the average cost of moving is around $1,400 for a local move and a two-man crew. But if you are moving farther than 100 miles, the costs of moving jump to a range of $2,200 to $5,700. That’s a major expense! Even if you skip the movers, moving your items often involves renting a truck and fuel costs that will add up quickly. Plus, if you have to take time off from your job to make the move, you’ll lose a portion of your typical paycheck.

Not only will you have to pay for the cost of moving, but other incidentals tend to creep in. For example, you might get stuck covering rent for your old place for a few weeks on top of your new place. For me, the process of moving often involves spending significantly more on takeout due to the fact that my entire kitchen is in boxes and I’m too tired to cook creatively. But other incidentals might include purchasing much-needed supplies for your new space or spending to replace things that you don’t have the energy to move.

Not only that, but once you get into your new space, you might need new furniture. For example, you might need to purchase a sofa or bed that fits your new space, and both could cost hundreds or thousands of dollars.

Ultimately, the costs of moving can get out of control quickly. Before you know it, a short move across town could cost you thousands of dollars.

As you start to incur these costs, you might be forced to put the extra expenses on your credit card. Unfortunately, turning to your credit card can negatively impact your credit scores, especially if your growing balance is trapping you in debt that might make it hard to make the minimum payment on time.

How to Protect Your Credit Scores During a Move

If you are moving, it’s important to take steps to protect your credit scores.

After all, good credit scores can open the door to many financial opportunities. Whether you want to tap into the best interest rates on a major purchase or reap the rewards of a high-end rewards credit card, protecting your credit scores is a necessary part of the plan.

Luckily, there are some straightforward steps you can take to keep your credit scores safe.

Sign Up for Online Billing Options

Wherever possible, sign up for online billing options. It’s important to be thorough when making the switch. With that, take the time to make a complete list of all your bills. Run through the list and make the switch to online billing preferences.

At this point in the digital world, most lenders have an online billing option. Beyond that, some bill providers will offer you a discount when you sign up for paperless billing or an automatic payment option. Not only will this ensure that you never miss a notification about a bill, but it also prevents the stacks of papers that tend to pile up in your mailbox.

If you are struggling to find an online billing option for one of your bills, reach out to the provider. In most cases, the customer representative should be able to walk you through the paperless billing process.

Notify Your Lenders About Your New Address

A wayward bill is a top concern for movers. But lenders also want the bill to make it into your hands. Otherwise, they might never get their payment.

When moving, you can notify your lenders about a change of address. Typically, there’s an option to make this change online somewhere in your account settings. When the lender gets this change of address, it should start sending all future communication to your new address.

Change Your Address with the U.S. Postal Service

The USPS offers a final safety net for those who don’t want to miss a bill or other important mail through its change-of-address service. Even if you have made the switch to online billing and have notified your lenders of the move, mistakes happen. This USPS service can provide additional peace of mind.

If you are moving, consider setting up a change of address with USPS. It takes a few minutes to set up. And as of October 2022, it costs $1.10 to finalize this process.

After you’ve filed for a change of address with USPS, the mail carrier will automatically forward mail from your old address. With that, any bills that are accidentally sent to your old address will be sent along to your location.

Build a Moving Fund in Advance

Although the need to move can come out of the blue, most have several months’ warning before making the trek to their new digs. When you learn that a move is on the horizon, it’s important to start planning out the financial logistics.

Start by researching the average costs for a move of your size. Those moving with only what they can fit in their car will find much different cost expectations than someone looking to move the contents of a three-bedroom home across the country.

Once you have an estimate of how much money you’ll need to make the move happen, it’s time to start building a moving fund. Within this fund, you can set aside money for the specific purpose of covering moving costs.

In some cases, it’s easier to break down this goal into monthly savings goals. For example, let’s say that you need $800 to complete your move. If you have 8 months to save, try setting aside $100 per month towards this goal. When moving day comes, you’ll be able to tap into this savings account instead of relying on credit.

Stick to a Budget

A moving budget can help you stick to the plan throughout the process.

Take the time to map out a moving budget based on your expected expenses. Of course, this should include the cost of physically moving your stuff, but it should also take other things like security deposits and new furniture into account. You might also want to consider the costs of spending on takeout while your kitchen supplies are packed away.

Be realistic about what you can afford to spend on the move. You might decide that spending on furniture simply isn’t in the cards at this point. That’s okay! It’s important to be honest with yourself about the costs involved. If you need to give your finances a breather, then consider holding off on non-essentials for a few months.

Everyone’s moving budget will look different. But taking the time to create a budget for your moving expenses can help you avoid inadvertently racking up credit card debt during the stressful process of moving.

Take Stock of Your Emergency Fund

In the best-case scenario, a moving fund will cover the bulk of your moving expenses. But moving rarely goes entirely according to plan. If you hit an unexpected bump in the road, then you can dip into your emergency fund instead of turning to your credit card.

Most experts recommend having three to six months’ worth of expenses tucked into your emergency fund. However, an emergency fund of any size will come in handy.

Take a minute to assess where your emergency fund stands. With this money set aside, you’ll have one more layer of financial protection for your credit scores while making a move.

How to Improve Your Credit Scores

Protecting your credit scores during a move is important. But if your credit scores have some room for improvement, it’s a good idea to work on increasing your credit scores whether or not a move is in your future.

Here are some strategies you can use to potentially improve your credit scores.

Make On-time Payments a Priority

Your payment history accounts for 35% of your FICO scores. While a positive history of on-time payments boosts your scores, late payments can negatively impact your credit scores.

Make every effort to pay your credit accounts on time. As you build a history of on-time payments, your credit scores should benefit from the change.

For anyone that struggles to stay on top of deadlines, turn to technology to harness the power of automation. Most bill providers offer an automatic payment solution, and some will even provide a discount when you sign up for auto payments.

But if you struggle to pay your bills on time due to a lack of cash, it might be time to overhaul your finances. Take a hard look at your income and expenses. If necessary, make cuts to discretionary spending to make on-time payments more feasible.

Try Credit Repair

Credit repair is the process of removing incorrect information from your credit report. If your credit report is riddled with negative errors, removing this information can have a positive impact on your credit scores.

It’s possible to handle this financial chore on your own. Simply gather information about the mistake and contact the credit bureaus. If you provide proof of the error, it should be removed within 30 days.

But if you don’t have the time to tackle this on your own, you can hire a professional credit repair service to do this for you.

Add a Credit Tradeline

Although credit repair will remove incorrect information from your credit reports, it won’t add anything positive. If you don’t have enough positive information on your credit report, it’s difficult to get good credit scores.

Opening credit tradelines give you the chance to add positive information to your credit report. Some credit tradelines include credit cards, personal loans, and auto loans. You can even piggyback on someone else’s established credit account as a way to build a credit history.

The Bottom Line

A move of any size can quickly get expensive and chaotic. But taking some steps ahead of time can help you protect your credit scores throughout the process. If a move is on the horizon, take action to protect your credit scores from harm.