Life is full of memorable milestones that are both amazing in one way yet frightening in another. Whether you’re buying your first home, getting married, starting your own business or all the above, you’ll quickly find that along with all those good things lies a few negatives as well, particularly when it comes to your credit. If you don’t want to end up with a sudden need for signature loans due to having bad credit amidst a last-minute financial emergency, here are a few credit-killers you should be prepared for.
Buying a house and getting everything ready for the big move is truly exciting, but the effect that it can have on your credit doesn’t share the same feeling. Mortgage loans leave a nasty inquiry on your credit report, and the amount of money you’re borrowing from the bank is astronomical when compared to, say, your auto loan. Not to worry though. After the first year of making your payments on time, you’re likely to see your credit climb back up the ladder. With time (and prompt payment), your credit will eventually make a full recovery.
Getting married doesn’t exactly KO your credit, but there are other related factors that might. The first thing most married couples are still doing is combining finances. When this happens, you’re not just sharing a bank account, you’re taking on each other’s debt too. Not to mention, the average cost of a wedding is around $20,000. If you’re planning on taking out a loan to pay for the following, you could see a sizable dip on your credit score:
Going into business for yourself isn’t a bad move, especially these days. It doesn’t pay to work for someone else while being expected to live off minimal wages. That said, be wary of what starting a business could do to your credit. While pursuing your lifelong dream is certainly a good thing, you need to have a practical business plan in place to avoid leaving yourself with a damaged credit score and no revenue to show for it.
Obviously, all of the above life events are exciting and should be pursued earnestly, but just keep in mind the consequences such events can have on your credit, and plan accordingly. If you don’t have a budget in place, now might be a good time to start!