Becoming a parent is an emotional, overwhelming and exciting time in your life. There is plenty to prepare for and you'll be juggling many different roles, including caregiver and provider. Whether you choose to be a stay-at-home parent, or it becomes the best option for your family during certain seasons of life, you might be wondering how you can continue to maintain and build your credit.
While working part-time to generate income is an option—such as flexible remote jobs—it's not necessarily doable for everyone, especially with an infant. In this article, you will learn about some ways you can continue to build credit as a stay-at-home parent.
Ways to build credit without an income
As a new parent, there are plenty of things you will have to sacrifice, and of course, plenty that you'll gain—however, your credit doesn't have to be one of the things that suffers. Below are a few ways you can continue to build credit as a stay-at-home parent without an income.
Become an authorized user
One way you can continue to build credit as a stay-at-home parent without an income is to become an authorized user. For example, if your partner is working, they could add you as an authorized user on their credit card. This would allow you to use the card as if it were your own. The primary account holder (in this case, your partner) would still be responsible for making the payments, but your name will also be on the account and provide you with an opportunity to build credit. How this works is that the credit history of that card will be the credit history on your credit report as long as you remain an authorized user.
Keep in mind when you're weighing your options that, as an authorized user, your credit could go one of two ways. It may improve your credit (if the primary card holder is responsible with making their monthly payments) or hurt your credit (if the primary card holder is irresponsible and defaults). As an authorized user, your credit is affected by the primary card holder's behavior as it pertains to their credit, debts and financial management.
Take advantage of appropriate credit cards
Even if you don't have a steady income, you can continue to use your credit cards in ways that benefit you. These include using credit cards that offer rewards for items like groceries, gas and dining. With raising children, you'll surely be making reoccurring purchases that could potentially add up to earn you rewards, discounts and other benefits.
These cards can include store credit cards (specific to a certain store or chain of stores within a network) or credit cards that could come with certain perks or lower annual percentage rates (APRs).
Use free tools like Chase Credit Journey® to assist you
Having a baby means lots of added expenses—you're probably hoping to save costs when possible or are wondering how you can maintain your credit score amidst all the new expenses. Consider using free online tools such as Credit Journey® to help you monitor and improve your credit score. You can get a personalized plan provided by Experian™ to help you take action to improve your score so that it's in good standing before and during parenthood.
With Credit Journey, you can:
- Receive a free, updated credit score as frequently as every seven days
- Monitor and track your credit score over time
- Enroll in credit monitoring and identity monitoring services to help keep your information safe
- Leverage free educational resources to help better understand your credit score
- Use the credit planning feature to help you map out your future credit score
Put utilities and other services in your name and pay them every month
Whether you're generating income from an outside source or sharing your partner's income to pay for bills, put utility bills and recurring bills under your name to build up your payment history and use a credit card to pay them off. But always make sure to budget carefully for these types of recurring expenses.
Payment history is a major factor that gets considered when calculating your credit score. Building up a solid, consistent payment history can help you to build credit as a stay-at-home parent. As long as you're making your payments on time, this is an excellent way to help improve your credit score over time.
Open a joint account with your partner/spouse
If your partner is providing a source of income and takes out a loan, consider having your name listed next to theirs. Opening a joint account with your partner (such as an auto loan) can help diversify your accounts, which can improve your credit mix. This can help you gain credibility in the eyes of lenders and help build a stronger credit score over time.
Building credit as a single parent at home
If you're a single, stay-at-home-parent, it may not be feasible to do all of the above. You may want to consider looking into any types of government benefits that could apply to you.
If you're feeling overwhelmed or confused, remember to reach out to the people who care about you for support. Discuss some options with loved ones before the baby arrives so you can have a plan in place, such as who can help watch your child while you work. By maintaining your payment history where possible, you can continue to build your credit.
Becoming a parent is a thrilling time, and the last thing you want to worry about as you prepare for parenthood is the state of your credit score. You can avoid stressing about how your credit score is doing by staying proactive and diligent, leaving you more time to focus on your child.