Stay-at-home parents can tank their credit by making these common mistakes
- Not building credit. Stay-at-home mom Mandy Logan is the first to admit she doesn’t pay much attention to her credit record. But, by having a credit card in her name, she does at least avoid the first pitfall stay-at-home parents often make: not building any credit in their own name.
- Spouse as sole borrower. Many stay-at-home parents mistakenly rely on the income-earning partner to always be the sole cardholder or borrower, another pitfall. That means when you do need credit of your own, you won’t have any history for lenders to evaluate. There’s a solution: The law says that even if you don’t have your own income, you can apply for a credit card in your own name by listing household income on the application.
While Logan does have her one card, she says her financial involvement stops there. “Since I’m a stay-at-home mom, I don’t really have much else I can do to help my credit that I’m aware of.”
Keeping yourself involved is key. Financial therapist Alycia DeGraff says the most important action you can take is staying in the know. That means communicating with your partner about finances. “Keep your names on all of the accounts, stay knowledgeable about what’s happening with investments, have access to the credit cards, see what’s being spent and avoid financial secrets,” says DeGraff.
Feeling financially empowered will also help you avoid the pitfall of going to the other extreme:
- Opening too many store cards. Every application for a credit card goes on your credit record and dings your credit score. Store cards in particular come with high interest rates.
- Emotional spending and overspending. Too many credit cards of any kind of can make it easier to engage in both emotional spending and overspending — two other credit pitfalls stay-at-home parents sometimes fall into.
“When you have this unstructured time it might be easier to go out and spend money that you may not have had the opportunity to spend before,” says DeGraff.
Talking with your partner, taking a walk, doing something creative or just gifting yourself an hour to read a book are all healthier ways of filling your time or de-stressing. Keeping your finances healthy while mastering your job of toddler wrangling will help secure a brighter future for the whole family.