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Want to Have Kids? You Need to Build Your Credit!

July 23, 2014
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If you crave sleepless nights and the pitter-patter of little feet, you may have babies on the brain. Having a child is mostly an emotional decision, but it’s also important to consider the financial aspects, too. One consideration is your credit score. An excellent credit score is useful for many reasons, and having children is no exception.

Upgrade your credit to upsize your crib

When you have children, you likely need more space than you did as a twosome. Whether that means upsizing to a larger apartment or setting down roots by purchasing a home, excellent credit will make your move easier and cheaper.

If you choose to buy real estate, you’ll likely take on a mortgage to help pay for it. Excellent credit, or a score of 720+, will get you the best terms available for a mortgage loan. To illustrate the importance of just one percentage point when it comes to interest rates, check out the difference between 4% and 5% on a 30-year mortgage.

Interest rate

Cost of home

Down payment

Interest paid









That’s a difference of $34,218 you could save by getting a favorable rate of 4%, instead of a rate 1 percent higher. If it really costs $241,080 to raise a child, as reported, that amount will cover a little over two and a half years of your Mini Me’s life!

Of course, buying a home isn’t for everyone. If you’d rather rent a larger apartment once you have a child, you’ll still need good credit to get approved for most reputable apartment complexes. Landlords want to see that you’ve been financially responsible in the past, because it’s indicative of whether or not you’ll pay your rent on time each month.

If you already have a couple of kids and have another on the way, you may also want to upgrade to an SUV or minivan to transport your growing family. To get approved for the best terms on a car loan, you need to have excellent credit.

Good credit: The gift that keeps on giving

As Junior grows up, excellent credit will come in handy time and again. Whether it’s financing braces, getting him a cell phone or cosigning for his first apartment, your good credit will be beneficial to your child and household.

OK, how do I build my credit?

First and foremost, go to to pull all three of your credit reports (don’t worry, it’s free!). Check them over for any mistakes by using our guide on how to read your credit report. Dispute anything that is inaccurate — your credit scores are derived from this data.

If everything is accurate, work on the five components of your credit score:

  • Payment history: Pay all of your bills on time every single month.

  • Credit utilization: Keep your percentage of debt to available credit below 30%.

  • Length of credit history: Don’t close old accounts or open a lot of new ones.

  • Types of credit in use: Use a mix of different types of credit accounts, but only if you need them.

  • New credit: Don’t apply for a lot of new credit accounts in a short period of time.

After that, you have to be patient. If you’re doing everything else right, your credit score will increase over time.

Bottom line: If you see kids in your future, start building your credit score today. The combination of an accurate credit report, good credit habits and time will make it easier for you to get a larger home or car, as well as help you get approved for a lot of kid-related things as Junior ages.

Smiling baby image via Shutterstock