How to Build Credit as a Stay-at-Home Mom

Being a stay-at-home mom is real work, even if it does not come with a paycheck. But when most of your household accounts are in your partner’s name, building credit in your own name can feel complicated.

The good news is that income is not part of your FICO Scores. You can still build credit through accounts that appear on your credit reports, as long as payments stay on time and balances remain manageable. Here are the options and risks to consider.

Can stay-at-home moms build credit without a job?

Yes. Your income and employment status are not used to calculate FICO Scores. Instead, FICO generally groups the information in your credit reports into five categories:

• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• Credit mix: 10%
• New credit: 10%

These percentages reflect the general population. The importance of each category can vary depending on your credit profile.

Income can still matter when you apply for new credit because lenders consider whether you can repay what you borrow. However, not having a paycheck in your name does not mean your application will automatically be denied or that you will need a cosigner.

If you’re 21 or older, a credit card issuer may consider income you can reasonably access, such as income regularly deposited into a joint account or used to pay your expenses. Requirements for other loans vary by lender and loan type.

Read more >> How to Build Credit While Unemployed

How to build credit as a stay-at-home mom

If you want to start building credit as a stay-at-home parent, here are a few options to consider.

Ask whether your rent can be reported

Putting a lease or recurring bill in your name does not automatically add payment history to your credit reports. Rent may appear if your landlord or a rent-reporting service sends the information to a credit bureau.

If you want to use rent reporting, ask whether your landlord participates in a reporting program or compare available services. Check which bureaus receive the information, what fees apply, and whether both on-time and missed payments are reported. Positive rent payments can help build credit, but reporting practices vary.

Apply jointly with your spouse or partner

If your household needs a mortgage, auto loan, or personal loan, applying jointly may be an option. Joint applicants are co-borrowers, not cosigners. Both are responsible for repaying the debt, and the lender may review each person’s credit, income, debts, and other financial information.

A jointly held loan may appear on both credit reports. On-time payments can add positive payment history for both borrowers, while reported late payments can hurt both credit profiles.

Before applying, make sure the payment fits your household budget and that both of you understand who will manage the account.

Before you apply together: Both borrowers are responsible for the full debt. Decide who will make payments and monitor the account, and consider whether the payment would remain manageable if your household income changed.

Become an authorized user

If your spouse, partner, or another trusted family member has a well-managed credit card, consider asking to become an authorized user. First, ask whether the card issuer reports authorized users to the credit bureaus. If it does, the account may appear on your credit reports.

An account with on-time payments and low balances may help your credit, while late payments or high balances could hurt it. The effect varies, and you are relying on someone else to manage the account responsibly.

Use a credit-building product

Credit-building products vary. Some provide a loan, credit line, or payment-reporting service, and they do not all report to the same bureaus. Before signing up, check the cost, payment schedule, bureau reporting, and what happens if you miss a payment.

Kikoff’s Credit Account is a free revolving line of credit used only for purchases in the Kikoff Store. It charges no interest and reports your on-time payments to Equifax, Experian, and TransUnion. There’s no hard credit check to sign up.

Read more >> What Is Credit Piggybacking and Does It Work?

How marriage and joint finances affect your credit

Marriage does not combine your credit reports or credit scores. You and your spouse continue to have separate credit files.

Shared accounts are different. A joint account can affect both credit scores because both people are responsible for the debt. An authorized-user account may also appear on the authorized user’s credit reports if the issuer reports it, but being an authorized user is not the same as being a joint borrower.

For example, imagine that you and your spouse open a joint credit card. If either person runs up a high balance and the household misses payments, that activity may affect both credit profiles, regardless of who made the purchases.

Bottom line

Being a stay-at-home mom does not put your credit on hold. Income is not part of your FICO Scores, and you may still have options even without a paycheck in your name.

Rent reporting, a joint account, authorized-user status, or a credit account of your own may add information to your credit reports. Before choosing an option, confirm where the account is reported, understand the costs and responsibilities, and remember that shared accounts can tie your credit to someone else’s payment habits.

Kikoff’s Credit Account reports your on-time payments to all three credit bureaus, with no hard credit check to sign up. Get started today.