People work hard to get their credit scores in good condition. The thought of something out of your control and bringing it down can be irritating. Moving to a new home is a good example of that. Helping you know what actually does affect your credit score can save you from unnecessary alarm.
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How changing your address can affect your credit score
Does changing your address affect your credit score? Not directly, but certain situations could wind up having an indirect impact. Let’s see how.
Bills can get lost if you haven’t updated your new address
If you fail to update your address, you could still get bills sent to your former residence. If you never get the bill, you probably aren’t going to pay it! Missed payments do impact your credit score.
Hard inquiry from a credit check
A hard inquiry occurs when a lender requests to review your credit file. This activity usually happens when you apply for a new line of credit, such as a credit card or mortgage. Lenders do this to check your credit history and determine your creditworthiness. If you keep having to take out loans or deal with mortgage companies, you’ll see repeated hard inquiries on your credit report.
A hard inquiry usually only affects your credit for a few months, though it stays on your credit report for two years. However, too many hard inquiries within a short period send a red flag to lenders because it seems like you are frequently looking to borrow money.
Putting moving expenses on credit
Regardless of whether you are moving locally or across states, relocating can be expensive. Paying for that move with a credit card will make things even more expensive as you rack up fees from high interest rates. When you add large expenses such as relocation costs to your credit account, your overall debt increases, ultimately lowering your credit score.
Do you need to notify credit bureaus when you change your address?
You do not need to update your address with credit bureaus provided you have an open credit account. What you should do is notify your lenders that your address has changed.
Your lenders will update the address on your accounts, which will then be reported to the credit bureau. Lenders usually update accounts after the end of a billing cycle, so you should allow between 30 and 45 days for the new address to be reflected on your credit report.
How to change an address on your credit report
If you need to update your credit report address, submit relevant documentation to any of the credit bureaus showing proof of your new address. This documentation could be a copy of any utility bill, bank statement, and identification card. The credit bureau would then change the address on your credit file.
Other information that does not affect your credit score
It can be tough to keep a list of what influences your credit score. Contrary to popular belief, not every financial action impacts it and vice versa.
Personal information
Your personal information includes things like your name, gender, and race. Those identifying features do not affect your credit score. So feel free to change your name to whatever you’d like! Just update your name on your credit report when you do it.
Employer
Who you work for or whether you’re employed at the moment doesn’t automatically impact your credit score. What matters is whether your bills are getting paid on time.
Expired negative information
Most things that negatively impact your credit scores, like delinquencies and missed payments stay on your credit report for 7 years. Bankruptcies can stay on for 10. After that time period has passed, however, they no longer impact your score.
Factors that do impact your credit score
If you change addresses with a credit bureau, your credit score may not be directly affected, but other factors could dent it. Let’s look at some of them.
Payment history
Payment history makes up 35% of your score. Your track record of payment is evidence of how creditworthy you are. Lenders like to see that you are consistent with payments. If you have frequent missed payments, your credit score suffers.
Outstanding debt
The amount of debt you owe tells lenders your existing liabilities, which allows them to judge your ability to repay the loan you are applying for. It also determines the amount of loan they would be willing to offer you. Outstanding debts make up 30% of your credit score calculation. If your outstanding debts are huge, they cast a shadow of doubt on your capability to repay the loan since you have existing debts. As such, your credit score may drop.
Credit history
Credit history accounts for 15% of your total credit scores. A longer credit history is good for credit score calculations because it shows lenders how you have managed loans and debt over time, enabling them to analyze your financial habits and ability to repay loans.
Credit utilization
Credit utilization, put simply, is the ratio of available credit to credit used. Typically, a lower credit utilization rate is considered better. Having a lower credit utilization may encourage lenders to raise your credit limit or give you more favorable lending terms.
Credit mix
A credit mix refers to the types of accounts (like a mortgage, credit card, or student loan) that make up your credit report. It accounts for 10% of your FICO score. A credit mix provides lenders with a more comprehensive view of your credit history because it shows how you can manage different types of credit.
New credit
Applying for new credit can hurt your credit score because it reduces the average age of all your accounts. This factor reduces the length of your credit history and your credit score. Having a longer credit history is better for your score.
Stay up to date
Moving from place to place may not automatically impact your credit score. However, it has other impacts that could wind up causing the score to fluctuate. Be mindful of those factors to keep your score and stress levels low.
FAQ
Can previous house owners affect my credit score?
No; although a creditor may ask your address, they are looking into your financial history, not that of the address.
Can the people I live with affect my credit score?
The people you live with will only affect your credit score if you apply for joint credit. Otherwise, your roommate’s credit will not impact your credit score.
Should you update your address on your credit report?
Yes, you should keep your personal information updated on your credit reports.
How long does it usually take to change the address on a credit report?
Changes on your credit report will normally take 30-45 days to show up.
