How a Move Can Affect Your Credit

Your credit follows you wherever you go, and that includes when you move to a new home. You may already know that your credit history can affect your ability to get approved to rent an apartment, but does the process of moving affect your credit in any way?

Credit Inquiries

When you apply for an apartment or other rental, the landlord will most likely perform a credit check.

When someone needs to access your credit report, whether they are a hiring manager, financial institution, or landlord, it’s called an inquiry. There are two types of credit inquiries: hard and soft. Most financial inquiries are considered hard and have the potential to negatively affect your credit, generally by a small amount. A lender may see you as a higher risk if you have several hard inquiries.

Soft inquiries are for purposes other than applying for new credit and don’t have an effect on your credit. Most landlords will opt for soft inquiries instead of hard, but it may be a good idea to double check. If the landlord plans to do a hard inquiry and you’re concerned about the effect it may have on your credit, check to see if they’ll accept a copy of your report that you pulled yourself. You’re entitled to one free credit report from each reporting bureau every twelve months, and checking it yourself will not affect your credit in any way.

Avoid Breaking a Lease

You should always avoid breaking the terms of a lease or rental agreement to the best of your ability. Of course, sometimes the unexpected happens and you need to relocate. In this case, communicate openly with your landlord and discuss your options.

Depending on the terms that are detailed in the lease agreement, you may have to pay extra fees or surrender your security deposit in order to terminate the lease. Make sure you pay any agreed amount on time. If you don’t, the landlord may have the right to take you to court or send the account to a debt collector. This type of activity will appear on your credit report and will damage your credit score.

Update Your Address

Missed or late payments can be very harmful to your credit. Depending on how late the payment is, it could appear as a negative mark on your credit report and also lower your credit score significantly. With the stress of moving, it can become more difficult to keep track of your finances and make timely payments.

Prior to your move, be sure to provide the United States Postal Service with your new forwarding address. This will ensure that you’ll continue to receive all paper bills in the mail and won’t miss any important notices about your accounts. If you were a renter, it may also be a good idea to provide your previous landlord with your new address, just in case any mail does not get forwarded correctly.

You should also remember to update all of your accounts with your new address.