How to Start a Family When You Have Bad Credit
Starting a family can be a financial challenge even under the best circumstances. If you have bad credit, it is going to be even more difficult.
You need to be very careful how you handle this situation because your poor credit score could lead to financial problems and damage relationships with your family members.
The good news is there are a few steps you can take to minimize the damage your bad credit will have on your ability to start a family.
1. Share your situation with your partner.
It does not feel good to have a bad credit score, so it makes sense if you are too embarrassed to reveal the problem to your partner.
However, this is going to lead to more serious problems down the road.
Instead, sit down with your partner and let he or she know exactly where you stand. Order a copy of your credit report so you both can identify problems and start putting together a plan to repair your credit.
This also gives your partner a chance to reveal any hidden problems he or she may have and will set the stage for more open communication during your relationship.
2. Discuss how you feel about co-signing loans.
Does your partner have a better credit score than you? If so, you would have the option of co-signing loans together in the future, like your mortgage or a joint credit card.
This strategy would help you qualify for loans you would not qualify for on your own. Your joint payments also build up your credit score.
At the same time, there are disadvantages to this approach.
The two of you may qualify for a worse rate on loans because your poor credit score hurts your application.
In addition, you also need to be very careful about making payments on joint loans, even if you are the primary person on the account.
If you miss payments on a joint account, it will hurt your partner’s credit score as well, which will definitely cause family tension.
“You don’t want credit problems
to cause you to miss out.”
3. Plan for larger payments.
To start a new family, it usually makes sense to buy a home and a family car. You will likely be able to buy both with a bad credit score, provided you can pay more. Lenders will require a larger down payment for both your car and home.
You should start saving as soon as possible so you can have this money ready. In addition, your interest rate will likely be higher, which means your monthly payments will be more expensive.
This is going to be a challenge to starting your family, but if you save more now, you can get around this issue.
4. Cut down on spending now for the future.
It is understandable that you only want the best for your family, especially if you have children.
You will be tempted to buy the best toys, the latest clothes and exciting vacations. It is important to hold back while you are dealing with your credit problems.
Any money you can avoid spending now is more money you can put toward paying off your debt. You definitely do not want to get further into debt so you can pay for these things.
Be responsible and make some sacrifices today so you will be in a better position to pay for more important things in the future, like college tuition for your children.
5. Ask other family members for help.
The rest of your family is probably just as excited to see you start your own family as you are. They may be willing to help until you get your finances in order.
Close family members may be willing to co-sign some of your loans so you can get a better interest rate. They also may be willing to lend you the money needed for a down payment.
This is one extra resource to consider while managing your debt problems.
Do not let your bad credit score get in the way of your dream to start a family. By following this advice, you will be able to start a family and put yourself in a good position to repair your finances.