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Almost everything I talk about on this blog is credit card related, whether it be credit card offers, point bonuses, or manufactured spending in general. The funny thing about it, though, is that I haven’t signed up for a new credit card in the past 6+ months. I have the urge, I just can’t give in to it because I plan on moving soon. What can I say? I’m an addict.
So, what does moving have to do with credit cards? A lot, really. Mortgage brokers, just like credit card applications, take a good hard look at your credit to determine your eligibility. If you have a lot of inquiries, debt, missed payments, or other problems on your credit report, you’re going to have issues and it’s going to be annoying.
As of right now, I’m planning on a late Spring or early Summer move to avoid both the chance of snow in early Spring and the chance of blistering hot summer days of July. I’ve been anticipating it since mid 2014, which has given me ample time to prepare… I think. I’m new to the process of moving while manufactured spending and travel hacking, but I figured I’d share what research I’ve done thus far. My hope is that it will help someone in a similar situation.
Knowing you’re going to move soon is the biggest step to preparing. I’m not talking about planning 3-6 months ahead of time, I’m talking about planning 1-2 years ahead. Moving (selling and buying a house) is one of biggest financial decisions you can make. It shouldn’t be taken lightly.
Once you know you’re going to move in the next year or two, it’s time to take a break on credit card applications, loan applications, and all other things that require hard credit inquiries. I know I know, missing out on great credit card offers sucks, but in the long run you’re much better off with a lower interest rate than you are with a few thousand miles.
Credit inquiries fall off your credit report after 2 years, so if you plan ahead far enough, you can completely remove all of the inquiries on your report. The less inquiries you have on your account when applying for any type of credit, the better.
Credit card utilization plays a role in creditworthiness. If you’re maxing out all the credit allocated to you, the bank may see that as a risk they’re not willing to take even if you pay your bills in full every month. Below 5% is ideal, so try to hit that or lower. That may sound tough while manufactured spending, but it’s not. Simply, pay your credit card off before the bank puts the balance on your report. If you don’t know what day, your bank does that, call or message them and ask.
Another way to lower your utilization is to ask for a higher credit limit. Be careful, though, because some banks will do a hard pull to determine if they want to make your limit any higher. Make sure you ask the bank if they do that before going through with it.
For some, reselling is a career. For others, it’s a hobby and side income. If you fall under the latter category, take a break around the time you plan on applying for a mortgage. Bank’s don’t consider product when determining your current income, so you don’t want to have it tied up that way.
I have a friend, who we’ll call Jack, that doesn’t manufacture spend at all. He just uses credit cards for everything to maximize his points. When Jack bought a house in October, the bank basically interrogated him on his credit card spending, asking why he used it so much, why there was money moving around often (from his bank to his card), and why he paid it off every month. Everything ended up working out, but banks are overly cautious, so just be aware that you may be grilled about your MS.
So, I wouldn’t say to stop your manufactured spending entirely (I won’t), but at least cut back.
The higher your credit score the better. You can find some tips on improving your score here.
As I mentioned, I’m new to the whole moving while manufacturing spend, so I’m just writing down the research I’ve done. If you have first hand experience with the process, please comment below.