Moving house can have a significant impact on your credit score, both positively and negatively. In this article, we will explore the various ways in which moving house can affect your credit score and what you can do to minimise any negative impacts.
One of the main ways in which moving house can affect your credit score is through changes in your address. When you move, your credit file may be updated with your new address, which can cause a temporary dip in your credit score. This is because credit scoring models use your address as one of the factors to determine your creditworthiness. A change in address can indicate a lack of stability, which can lead to a lower credit score.
Another way in which moving house can affect your credit score is through changes in your credit accounts. When you move, you may need to open new accounts for utilities, cable, and internet services. Each time you open a new account, it will be recorded on your credit file, which can also cause a temporary dip in your credit score.
However, there are also ways in which moving house can positively impact your credit score. If you are moving to a more desirable area, your credit score may improve as a result. This is because credit scoring models also take into account the area in which you live, and a move to a more upscale area can reflect positively on your creditworthiness.
To minimise any negative impacts on your credit score when moving house, there are a few things you can do. First, you should notify all of your creditors of your new address as soon as possible. This will ensure that your credit file is updated with your new address, reducing the risk of any errors or inaccuracies.
Next, you should also try to maintain your existing credit accounts. If you have credit accounts that you have had for a long time, it is important to keep them open and active. This will help to demonstrate that you have a long credit history, which can positively impact your credit score.
Finally, you should also be mindful of your credit utilisation ratio when moving house. Your credit utilisation ratio is the amount of credit you are using compared to the amount of credit available to you. When you move, you may be required to open new accounts, which can increase your credit utilisation ratio. To minimise any negative impacts on your credit score, you should try to keep your credit utilisation ratio below 30%.
In conclusion, moving house can have both positive and negative impacts on your credit score. To minimise any negative impacts, it's important to notify your creditors of your new address, maintain your existing credit accounts, and be mindful of your credit utilisation ratio. With a little bit of planning and care, you can minimise any negative impacts on your credit score and ensure that your credit score remains in good standing.