3 Ways a New Job Can Help Your Credit

BadCredit.org Article

Whether you’re hungry for a new challenge, bothered by office politics, or simply looking for more opportunity, the prospect of a new career can be both exciting — and terrifying. Worries over interrupted income streams and uncertain futures can cause many to be wary of making a much-needed job change.

The decision to change jobs can be especially scary for those dealing with debt or working to rebuild their credit after a financial stumble. But choosing a new career doesn’t necessarily have to mean putting your financial goals on hold.

For one thing, the variety of online job searching and networking resources available today allow modern job seekers to search for a new job without needing to take time away from their current positions. By taking advantage of automated searches and notification features, you can avoid a long income interruption.

And, contrary to what many may think, changing jobs won’t negatively impact your credit rebuilding efforts — if it’s done wisely. FICO doesn’t actually factor your profession into your credit score calculations, so most impacts come from falling behind on debts. If you plan ahead to ensure you can pay all of your debts in the event of a small income gap, you can prevent any potential missed or late payments.

In fact, not only can you work to avoid the possible negative credit impacts of changing jobs, but you may actually be able to help improve your credit with a new career. Everything from a bigger salary to a happier life can help you get out of debt and boost your score.

1. An Increase in Your Income Can Help Pay Down Debt

Although it can be intimidating to consider the road back to good credit after you’ve had a few stumbles, you don’t have to deal with bad credit forever. For some people, a low credit score can be buoyed simply by dealing with errors and unsubstantiated accounts through credit repair. Many of the best credit repair companies can make the credit repair process fast and easy.

Unfortunately, when it comes to legitimate debts, it generally all comes down to paying your balance — and doing so as quickly as you can. That’s where your new job comes in. Your FICO score calculation counts your amounts owed for 30% of your score, so paying down existing debt can do wonders for a low score, and a larger salary means more funds to put toward that debt.

Even if your salary itself remains the same, a new position that is a shorter commute, has better benefits, or other associated perks, can also mean seeing growth in your bottom line. The key to paying down debt with a new job is to consider any additional funds brought in as already earmarked for those debts before you even see your first paycheck.

2. A Bigger Salary May Improve Your Credit Limits

A salary boost can also equal a small credit score boost through your utilization rate. This credit scoring factor looks at the total amount of credit you have available — your credit limits — and compares it to how much of that credit you are using. Essentially, the smaller your utilization rate, the better your credit score will be.

One way your utilization rate can be improved (other than paying down your balances) is by increasing your available credit through your credit card limits. Many credit card issuers will happily re-evaluate your credit limit to account for any salary changes and may increase your credit limit accordingly. Even if you’re in the process of rebuilding, you can find credit cards for bad credit that will likely give you a limit boost with a better salary.

3. Better Job Satisfaction Can Reduce Impulse Spending

Perhaps a less obvious factor in your finances, your job satisfaction can actually influence every other facet of your life, including your off-the-clock spending habits. Those who are unhappy at work (the place they spend a third or more of their time) are more likely to seek outside sources of pleasure — and that can get expensive.

For example, you may need that extra cup of fancy coffee to get through an uninspiring afternoon, but the seemingly insignificant addition to your daily routine can add up to $1,000 or more over the course a year that could have gone toward your debt. So, a new job, perhaps with better hours or a more stimulating environment, can not only mean a happier work day but a happier budget, as well.

Don’t Be Afraid to Find Your Dream Job

Although the thought of changing jobs can be intimidating, especially when dealing with an already precarious financial situation, it isn’t impossible. With planning and preparation, it’s possible to not only find a new, more inspiring position, without damaging your credit or your efforts to reach a debt-free life. In fact, with some smart choices and diligence, your new job can expedite your journey to reach your financial goals.

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