Understanding Credit Scores and Financial Options for Relocating Professionals

Key Takeaways

1. A credit score is a 3-digit number, usually ranging from 300-850, which depicts the creditworthiness of an individual.
2. Credit scores play a major role in financial life, impacting the ability to get loans, housing, utilities, and even some jobs. 
3. Too many new accounts can lower scores temporarily and risk overextending finances. 
4. According to Experian, some easy tips for boosting your credit scores are setting up automatic bill payments, prioritizing revolving debt, having a credit-builder loan, and restricting new lines of credit.
5. Financial options to consider as a relocating professional are personal loans, credit cards, home equity loans, and payday loans.

As professionals nationwide pack their boxes this moving season, credit scores may not be a top concern, but they should be. This three-digit number plays a key role in financial life. For those relocating for a new job or other major life change, their credit score can impact their ability to secure housing in their new location or turn on utilities, things that are often needed quickly after a move.

Even those with solid finances may be surprised where else credit reports are referenced, like by some employers and insurance providers. For those looking to build up their profiles after getting settled, it’s key to first know the basics of what goes into a credit score.

What Is a Credit Score?

A credit score is a 3-digit number depicting the creditworthiness of an individual. 

When embarking on life’s next big chapter, few things matter more than the three-digit credit score that unlocks major purchases and opportunities. Yet experts say most people underestimate its power in shaping their financial futures.

Your credit score can determine whether you get approved for an apartment, car loan, or even some job offers. Simply put, it provides a direct view into how reliably someone has paid back debts historically.

Scores generally range from 300 to 850, with higher being better. Lenders use these numbers to decide who qualifies for loans and at what interest rates. With so much depending on access to credit, financial advisors urge soon-to-be grads, newlyweds, and other milestone markers to understand and build their scores early on.

Especially for big life changes like a long-distance move, good credit counts more than ever when deposits, transfers, and unexpected costs add up quickly.

The good news? No matter where you’re starting from, small steps repay over time. Paying bills on time, keeping balances low on credit cards, and managing a mix of credit types help scores incrementally improve.

How To Build a Good Credit Score In 2024

Three major power players in the UK credit industry are Experian, TransUnion, and Equifax. Let’s examine their top recommendations:

Set Up Autopay to Avoid Missed Payments

Some bill payments slip through the cracks between work, family, and life’s curveballs. Autopay is a little hack that takes the weight off your shoulders. Just enrol once, and it’ll automatically deduct loan and credit card payments on time every time. It’s one of the simplest ways to build responsible credit. 

Target High-Interest Debt First

Not all debt is created equal, and those credit card balances can pile up interest fast if you’re not careful! Tackle the card first before any lower-interest debts. Of course, it’s not fun, but showing lenders you can handle high-interest debt responsibly will pay off down the road.

Build Credit with Strategic Loans

Credit builder loans allow borrowers to demonstrate responsible repayment behaviour. These fixed-term instalment loans have mandatory monthly payments, each of which gets reported to credit bureaus. Over time, obediently paying off a credit builder loan can raise scores or help rebuild creditworthiness.

Say No to Unneeded New Credit

Getting approved for new credit might give you a rush, but financial experts caution consumers to think twice before signing on the dotted line. Each new credit application triggers what’s called a ’hard inquiry’ on your credit report, which can actually cause your credit score to dip, at least temporarily.

Too many borrowers bite off more than they can chew with new credit cards and loans. They get approved for more credit before paying down older debts, then struggle to keep up with all the payments.

Instead of piling on new debt, the smart move is to create a budget and focus first on paying off your existing balances. Only apply for additional credit when you truly need it.

Understanding Loans and Credit for Relocating Workers

We’ve covered the fundamental questions about credit loans. Now, let’s help you understand your financial options as a relocating professional.

Personal Loans

For many, personal loans are the first choice when money needs to appear quickly. Their unsecured nature and ease of approval make them a popular pick to cover moving expenses without headaches.

Credit Cards 

Credit cards also simplify paying for a move but work best for those with high credit scores. If your limit can handle the costs, they allow paying off moving bills over time. However, beware of steep interest rates, which cards charge unless you secure special low-rate deals.

Home Equity Loans

For homeowners, second mortgages allow borrowing against the equity in your house. While similar to regular mortgages, home equity loans come with fixed interest rates and permit borrowing 80-90% of the home’s value.

An expat mortgage can be a good option for those buying property back in their home country while living and working abroad.

Payday Loans

Payday loans offer a quick financial rescue for people who need extra money yet are facing pressing moving expenses. However, buyers need to be aware of the catch—very high loan rates. Payday loans are so frequently seen as an extreme last-resort option. Tough circumstances, however, can drive people to extreme actions when debts mount, and alternatives are limited.