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How New Parents Can Protect Their Credit

Planning for the arrival of a new baby is exciting, but you’ll probably have to face some major financial changes. Between buying baby gear and planning for medical expenses, your budget can easily get blown out of the water. Plus, you could put your credit score at risk without even realizing it. If you’ve recently brought home a new bundle of joy or you’ve got one on the way, you can’t afford to let your credit slide. Here’s how to make sure your score doesn’t take a dive.

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Think Carefully Before Applying for New Credit

A rewards credit card can be a valuable tool for any new parent who wants to earn cash back or points on the things they buy the most. For example, if you’re doing more cooking at home and picking up diapers on your weekly grocery shopping trip, a card that pays 2% or 3% cash back at supermarkets might be perfect for you.

The one thing you don’t want to do, however, is go crazy and apply for every rewards card that’s out there. Every time you fill out a new credit card application, it causes a hard pull of your credit report. Each new inquiry can trim a few points off your credit score, so you’re better off researching different card options and picking just one or two. If you need help finding the right card, check out our credit card comparison tool.

Don’t Go Overboard With New Baby Shopping

How New Parents Can Protect Their Credit

When a baby’s coming, it’s tempting to want to go on a shopping binge. But that’s the last thing you want to do if you’re paying for those adorable booties or cute onesies with a credit card. Thirty percent of your FICO credit score is based on the amount of debt you carry. If you’re close to maxing out one or more credit cards, that’s going to drag your score down.

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If you’re going to use credit to finance some of your new baby-related purchases, it’s a good idea to keep your balances as low as possible. Instead of constantly swiping your card, you can use any rewards you’ve racked up to offset some of your expenses. For example, if you’ve got $300 in cash back rewards, you could redeem that as a statement credit against the cost of the pricey stroller you’ve had your eye on.

Put Your Bills on Autopilot

The first few weeks after the birth of a child can be extremely hectic if you’re juggling doctors’ appointments and dealing with a steady stream of visitors. Throw in lack of sleep and the odds are good that you”ll forget to stay on top of your bills. All it takes is one missed credit card payment to send your score into a downward spiral.

Your payment history counts for 35% of your credit score and even one late payment can cause serious damage. Scheduling automatic payments for all of your bills is an easy way to sidestep a ding on your credit report. It might take a few minutes to set up, but it could be well worth it if it helps you keep your good credit intact.

Related Article: 4 Ways to Put Your Finances on Autopilot

Keep Track of Medical Bills

How New Parents Can Protect Their Credit

Having a baby is expensive and at some point you’ll probably have to deal with a stack of medical bills related to the birth. It’s important to keep these documents organized so you know what’s been paid by your insurance company and what you’re expected to pay out of pocket. If a bill goes unpaid, it can end up in collections. And that can knock big points off your score. What’s more, you could end up getting sued by a debt collector.

Final Word

Preserving your credit as a new parent isn’t really all that complicated. It all comes down to making smart decisions with how you use your credit and taking the time to keep tabs on your bills. Following these tips can keep you from experiencing the baby blues where your credit is concerned.

Photo credit: ©iStock.com/vadimguzhva, ©iStock.com/numbeos, ©iStock.com/jonas unruh

Rebecca Lake Rebecca Lake has been writing about the nuts and bolts of personal finance for nearly a decade. She is an expert in investing, retirement and home buying topics. Her work has been featured on The Huffington Post, Business Insider, CBS News, U.S. News & World Report and Investopedia. As a homeschooling mom of two, she's always looking for ways to make the most of every dollar.
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