Why You Should Maintain Your Credit After Buying a Home
There are many reasons to maintain your credit in a healthy way, but it’s easy to feel like you don’t need to keep it a priority after hitting a goal, such as purchasing a home.
This is not the case! Credit still needs to be maintained after buying a home and you can do so with very simple everyday tasks.
Being a homeowner does not mean that all of your problems disappear. Homeowners will encounter large unexpected purchases such as broken water heaters, outdated washer and dryers, needing a new large appliance, damage to the roof, or a broken fence.
These incidents are typically very costly and if your credit is not well maintained when disaster strikes, you might be unable to take care of it.
Some rules of thumb that will help keep your credit in good health are:
- Pay bills on time
- Pay off debts
- Monitor your credit report and correct errors
- Avoid signing up for new credit cards or loans
Needing loans later on
Like we mentioned above, there are instances where you may need to take out a loan after buying a house due to unforeseen circumstances. These circumstances could make your life extremely difficult or even dangerous if you are unable to take out a loan and fix the problem.
In some cases, you would need to leave your home for a certain amount of time in order for those problems to be fixed. If you needed to take out a large personal loan to cover expenses of fixing that problem as well as paying for your hotel stay somewhere, you would be expecting the loan to go through without any hiccups.
If you allowed your credit to slip after buying a home, your chances of having a less stressful transition during an emergency would be very low.
Following the purchase of your home, it's important to follow these steps to increase and maintain your credit score!
Paying down credit card debts
When you are focused on maintaining your credit, you are most likely not going to rack up your credit cards with big purchases. Instead, you’ll be focused on paying your credit cards on time and most likely you’ll have the intention of paying off those credit card debts.
You’ll avoid the trap of putting a ton of new purchases on credit since your goal is to keep your credit card balance and usage low to enhance your credit.
You plan on buying another home in the future
Missing payment on either your mortgage payment or credit cards payments will not only affect your credit score but it will also show up in the underwriting process when you apply for a loan the next time you purchase a home.
By becoming too relaxed or careless with your credit, you could be jeopardizing your chances of qualifying for a loan in the near future.
It’s good to get comfortable in your new home, but don’t get comfortable or lenient with your expenses. Create a budget and stick to it! By creating a budget, this helps you avoid going further into debt and gives you a visual perspective of where your money is going.
This can oftentimes become a reality check for those who are prone to unnecessary credit card usage. It will allow them to see just how little they can actually afford, while seeing how much they are spending on their credit card, all the while declining their credit health. Don’t forget, the more you use your credit card without immediately paying it off, the more it hurts you!
Credit is good, but it isn’t meant to be abused or used as the sole source for paying for your life.
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