With the exception of losing your first tooth, most of life’s major milestones aren’t cheap.
Whether it’s buying a car, going to school or getting married, you’ll need some savings squirreled away and a healthy credit score to ease the pain of borrowing more money.
But some of these big moments can also raise or lower your credit score all on their own, putting you in a better or worse position for the next milestone down the road.
While life is more than a checklist, most of us will experience these events at some point. Learn how they can test or impact your score — so you’re prepared when the time comes.
1. Getting your first credit card
Getting your first piece of plastic gives you a lot of responsibility, whether it happens in your teens or later in life. You might not be too focused on building your credit score when you’re young, but an early start will help you hit the rest of the milestones on this list.
The length of your credit history accounts for 15% of your FICO score, and it’s not something you can really fix down the line. Keep in mind, it will take some time before you see results; you need to have an account open for at least six months before you get your first score.
Unfortunately, we don’t all make good decisions when we’re young, and an early start won’t matter much if you don’t use your card responsibly. Your history of punctual payments is the biggest influence on your score, making up 35% of the final number.
Luckily, there are a few ways to take back control if you start spiraling into debt.
Anyone struggling with minimum payments should consider credit card refinancing or credit card consolidation. If you can switch to a loan or credit card with a lower interest rate, you can save money and pay down your balance quicker.
2. Graduating from college (or not)
The period in your life immediately after leaving college can be critical, both professionally and personally.
Whether you graduated with honors or fell several credits shy of receiving your diploma, your academic record won’t impact your credit score — that’s the good news.
Your student loans, on the other hand, will influence your score.
While other financial obligations — like rent or car insurance — aren’t typically reported to the credit bureaus, student loan payments are. And this new type of credit will add to your credit mix, which accounts for about 10% of your FICO score.
Just be sure to make your payments on time, and don't suffer more than you have to. With interest rates way down, you can refinance your student loans and potentially save thousands.
3. Getting married (or divorced)
What’s more exciting than your wedding night? The eager bride and groom can finally get down to business — and talk about their credit history.
Being single is easy. You only have to keep tabs on your own credit score. But when you tie the knot and open joint accounts, they’ll show up on both your credit reports.
Now you’re not the only person responsible for your debt, and how well you manage it will impact both of your credit scores.
The situation can get pretty delicate if the marriage ends. When you go through a divorce, you’re still responsible for shared credit cards and loans you opened when you were married, at least until they’re closed or you have your name legally removed from the accounts.
Divorce and debt typically go together, a MoneyWise survey found. About 40% of respondents said divorce had saddled them with more than $5,000 in debt.
4. Buying your first home
Sure, it’s the American dream — but to make that dream come true, you’ll be taking out the largest loan of your life.
You’ll need a solid credit score if you want to qualify for a home loan, and a great credit score if you want to take advantage of the incredibly low mortgage rates available in 2020.
You’re likely to get a small ding on your score when you apply for a mortgage, as the lender will make a “hard” inquiry that will show up on your credit report. But you’ll erase that blip soon enough, simply by making your payments on time and adding a home loan to your credit mix.
The real concern is missing payments. Your big monthly commitment can suddenly become a liability if you lose your job or face some unexpected medical bills.
If you run into trouble, look into the forbearance that 's currently available to put your monthly payments on pause — or, better yet, refinance your mortgage to take advantage of today’s record-low rates. You could save hundreds of dollars a month.
Many Americans treat themselves in their golden years, and take out loans so they can finally get that vintage car or cottage by the lake.
A solid credit score will make those dreams more affordable — which is more important than ever once you shift from collecting paychecks to relying on your retirement savings and Social Security.
Even if you’re not making big purchases anymore, you could save a lot of money by keeping your score in good shape. You might get a better deal on car insurance or land a low rate on your homeowners insurance, because your credit often plays a role in the premiums you pay.
One easy way to keep your score high as you age? Keep your old accounts active to preserve your credit history. If you have a longtime account in good standing without annual fees, don’t be hasty to close it when you pay off your balance.
You also might want to sign up for a free credit monitoring service, which will inform you if your score ever drops due to a missed payment, fraud or an error on your credit report.