Relocation is stressful enough without having it damage your credit. With a bit of planning, you can maintain your sanity — and your credit score
Packing up to move? Don’t overlook the little things in your wallet.
Though you are moving, your credit card company may not have gotten the memo. A little preparation goes a long way in getting your credit off on the right foot in a new locale.
According to the U.S. Census, 7.1 million Americans moved from one state to another in 2012. That’s nearly a 5 percent increase over relocations in 2010, which dipped significantly during the economic downturn.
Whether you’re picking up stakes and heading across state lines or relocating locally, keep these tips in mind for efficiently moving your finances — before, during and after you arrive in your new home.
Before you move: Keep finances stable
As part of your move, you might be selling your home and assuming a new mortgage — major financial transactions that can potentially distract from your day-to-day financial responsibilities.
So right around the time that you start dreaming of your new digs, consider how to make your financial obligations less stressful throughout your relocation process. Here are some tips.
- Don’t make any additional drastic financial changes. Use your existing cards to finance your move rather than opening up new lines of credit, pay all your bills on time and put off additional major purchases, such as a new car (tempting as those might be). The reason: opening up new cards, defaulting on bills or incurring major debt all negatively affect your credit score.
“The rule to getting a mortgage when considering buying real estate is when you are making a move, try to make sure you keep everything stable,” said Joan Brothers, president of Manhattan Boutique Real Estate in New York. “Even those who move and rent a place have their credit scrutinized.”
- Set up auto-payment for your credit cards. This easy step can go a long way toward reducing your stress. “Lots of little things fall through the cracks when relocating. Don’t let your credit card bills be one of them,” said David Bakke, a financial columnist at MoneyCrashers.com. If you prefer, you can always revert back to your old payment system after you move.
- Cancel your old auto-payments. Take a look at what currently might be automatically billed to your credit card or checking account. Your payments for items such as newspaper, cable TV, utilities (including Internet service) and gym memberships all should be canceled so you are not billed for services you aren’t using after the move.
- Pad your emergency fund. “Conventional wisdom holds that individuals need to save six to nine months’ worth of living expenses,” said Kevin Gallegos, vice president of Phoenix operations for Freedom Debt Relief. “With the inevitabilities of moving and always some surprise expenses, it’s extremely important to build up this fund.” Adding some extra cash to your emergency fund is wise in case any surprises pop up in the course of your move.
During your move: Be choosy about new credit
For example, while new credit card applications are commonly associated with relocation (it’s one of the chief reasons people get new credit cards besides going to college, graduating and getting married), you need to be careful about which cards you choose.
- Be discriminating as you apply for new credit. Store cards offering one-time incentives may seem like a good deal now, but may not serve you well in the long term. Find out which cards are most advantageous to use in your new city.
When he recently moved to Shanghai, Mark Elliott focused on using only his cards that did not charge a foreign transaction fee. “Also, do some simple research to find out what cards are accepted in the area you are moving,” said Elliott, president of Elliott Asset Management. “In my case, Visa and MasterCard are only accepted at the highest-end shopping outlets, so I have made arrangements for a new bank account and local credit card.”
- Don’t leave sensitive financial information behind. Ensure that all financial records are securely packed in bags or boxes that are staying with you (as opposed to going on the moving van that’s driven by someone else).
After you settle in: Take advantage of your fresh start
Think about your relocation as an opportunity to start fresh — you can create new processes for paying your bills and staying organized.
- Change your address. Make sure your address has been updated with each of your credit card companies as well as through the post office so you don’t miss statements and other important information.
- Update your auto insurance and your home insurance. “Your move — even just to a nearby neighborhood — may bring about some rate adjustments” for car insurance, said Gallegos. Shop around for home insurance when you move, and then survey the rates periodically so you can ensure that you’re getting the best deal.
- Protect yourself from identity theft. If possible, ask for cards with updated security features such as chip technology that offer a bit more protection. Also set up a system for destroying sensitive financial information in your new home to protect against identity theft.
- Make a commitment to stay organized in your new home. With your fresh start comes an opportunity to create a streamlined process of paying bills and checking your credit report annually. Keep files updated with your credit card agreements and any additional correspondence.
In short, treat your credit with care as you move. Like your delicate vase, it doesn’t need any unnecessary jostling.
Printable guide:Your relocation credit card checklist