Are you wondering how you can build credit as a stay-at-home mom? If so, then this article is for you.
To ensure I provide you with a complete resource, I spoke to some experts in the industry to get their advice on this topic. Keep reading to learn what they said.
As stay-at-home moms, it’s very important that we have a plan to secure our financial future in case of unforeseen circumstances. Those circumstances might be your spouse losing their jobs, getting a divorce, or the death of your spouse.
At any time, you may have to jump in to become the sole breadwinner for your family. This may require you to get a loan where you’d need to show a good credit score.
Part of securing your financial future is making sure that you have good credit. I’m sure you’ve heard this quote before “those who fail to plan, plan to fail”. Now is the time to build your credit before you need to use it.
In this article, I’ll give you some steps you can take today to achieve this goal.
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Before you can build credit, you must have a way to make your payments
Before you even think about getting a credit card, you have to first determine how you plan to make your credit card payments. If you’re a stay-at-home mom that doesn’t make any money, then you’ll have to rely on your spouse’s income to help you repay your creditors.
You could also consider doing some side gigs to earn money as a freelancer. Some things you can do are grocery delivery like Instacart, DoorDash, Uber, etc. Check out 12 Best Side Jobs For Stay-at-Home Moms for a complete list of things you can do to earn money today.
To build your credit, you need to know your current credit score
Jeanne Kelly, a credit consultant, and coach suggest that you need to find out what your current credit rating is. “Start by pulling your credit report to see what is reported about you with Experian, TransUnion & Equifax. It’s free to do and it won’t hurt your credit score when you pull your own credit report”
It’s only when you know what your current credit score is, that you can come up with a plan of action for building it back up. Annualcreditreport.com is a free government-mandated website that’ll report your credit scores from the three credit reporting agencies. Go ahead and check your score now.
Now that you know what your credit score is, let’s look at how you can begin to build back your credit.
How can you build credit as a stay-at-home mom?
To build credit as a stay-at-home mom, you need to have credit accounts in your name. A car loan, mortgage, credit card, student loan, etc. are all examples of credit accounts that you can have in your name to build your credit.
A credit card that lists your name as the primary cardholder or an authorized user can also be used to build your credit.
Using a credit card that only has your spouse’s name on it will not help you build a credit history. Also, having your name on the utility bills won’t help you either since most utility companies don’t report to the credit bureau.
Below is a list of ways you can start building your credit as a stay-at-home mom
Get a store credit card
Ms. Kelly, a credit consultant/coach suggests that stay-at-home moms should use a store credit card to build a credit history.
“You might have store cards you have had for a long time and just forgot you had them. If they are still open, use them to show recent activity. Just make sure you update your name, address, and phone number if those things have changed”.
Obtaining a new store credit card is not as hard as you think. I once got a JCPenny, TJ Maxx, and a Macy’s credit card in the same year when I was in college. I was not asked to provide a credit history, and it took under 40 minutes to sign up at the register.
Finance a new phone through the manufacturer
Another way to build your credit as a stay-at-home mom is to finance a phone through the manufacturer.
Just paying your phone bill on time will not increase your credit score (although missing payments may get your account sent to collections, which will negatively affect your credit score). Phone and other utility bills are not reported to the credit bureau.
When you get a new phone directly from the manufacturer (i.e. Apple or Samsung), they’ll open a line of credit for you which will be reported to the credit bureau. As you make timely payments, your credit score will gradually increase over time.
Please Note: financing or leasing a phone through a wireless carrier (e.g AT&T, T-Mobile, etc.) will not help you build credit. According to Chase, these wireless carriers usually don’t report your payments to the three credit reporting bureaus.
Become an authorized user on your spouse’s or someone else’s credit card
Brooklyn Lowery, a credit card expert at CardRatings.com had this to say
“If you’re building credit from scratch, an excellent first step is to ask a responsible and trusted individual to add you as an authorized user on one of their credit cards. As long as they pay their bills consistently on time, your credit score will likely benefit from their good behavior. Just make sure the bank reports authorized user activity to the credit bureaus”.
As an authorized user, you’re allowed to use the credit card without worrying about making payments. It’s the responsibility of the person who owns the card (primary cardholder) to make the credit card payments.
The good news is that your credit score will continue to rise as long as the person makes their payment on time.
Unfortunately, if the primary cardholder defaults on a payment, then it will also affect your credit score. So make sure you choose a responsible person when thinking of becoming an authorized user.
Open a joint credit card account with your spouse
Getting a joint credit card account may be the best route for a stay-at-home mom to build credit. With a joint credit card, your name and your husband’s name will be in the account as the primary cardholders.
You will both be able to monitor your spending activity. Knowing how much you spend each month will allow you to create a more balanced budget.
One thing to note is that with a joint credit card, both you and your spouse are responsible for the payments. If the payments are not made, both your credit scores will suffer.
Get a credit card in your own name
A stay-at-home mom can build credit even if she has no income or credit history. She can still get a credit card in her own name. There are a few credit card options for people with little or no credit. They include a secured credit card, a student credit card, or a credit builder loan.
Keep reading to see the difference between each one.
What type of credit card can a stay-at-home wife get?
Student credit card
One way to get a credit card as a stay-at-home mom is to apply for a student credit card. You don’t have to be a full-time student to qualify.
Just taking one class a semester will be enough to prove you’re a student. Most banks will ask for proof of enrollment in a college or university when you apply.
A student credit card is easier to get because issuers understand that most students have little to no credit history.
One thing to note is that the interest rate may be higher with these types of cards compared to a regular credit card. You’ll also have a lower credit limit as well.
Secured credit card
A secured credit card is one where you put down a small security deposit during your credit card application process, in exchange for a line of credit. This is because people that apply for a secured credit card are usually those with bad credit or no credit history.
Ms. Lowery, a credit expert said that “after several months of consistent responsible payment, many banks will automatically evaluate your account in order to transition you to a regular credit card. Your security deposit will then be returned”.
This option is a great way for a stay-at-home mom to build her credit score. Think of the security deposit as an investment in your future. You’re going to get it back anyway if you make payments on time.
Just like the student credit card, you may get a very low credit limit. But don’t worry about what the amount is. As you make payments consistently, your credit limit may increase as your credit score increases.
Credit builder loan
A credit builder loan is another option for a stay-at-home mom with little to no credit history. According to Nerdwallet, a credit builder loan is a loan you take from a financial institution (usually a community bank or credit union).
If you’re approved for the loan, the bank will hold the money and put it into a bank account for you. Your job will be to pay a portion of the loan amount every pay period.
You will not be able to access the money in the bank account until you’ve made all the payments. Your payment history is reported to the three major credit bureaus. Your credit score will increase as you make consistent, timely payments.
Building credit as a stay-at-home mom is a very important part of securing your financial future. In this article, I have shown you various things you can do today to build your credit score.
As a recap, you can apply for different credit cards. These include a student credit card, a secured credit card, or a credit builder loan.
You can also get a joint credit card account with your spouse, get a store credit card, or finance a new phone through the manufacturer.
One of these methods is sure to work in helping you build credit as a stay-at-home mom.