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Whether you’re getting married, or you just want to change name by deed poll, there are many people who simply don’t understand all the implications this has. Now, whatever the situation is, the first thing you’ll be doing with your new name is updating all your documents. And that should also include your credit rating.
What is Your Credit Rating?
Your credit rating is basically a quantified assessment of how creditworthy you are as a borrower, with respect to a particular financial obligation or debt. It’s something that is assigned to any entity that aims to borrow money, whether it’s a government, a state, a corporation, or you as an individual. In its simplest form, it’s a way for organizations to judge how likely you are to be given some kind of credit.
You will come across three main terms – credit rating, credit score, and credit report. The rating refers to a variety of systems that are all used to judge how creditworthy you are. The score is a specific numerical value. Depending on your circumstances, it could go up, or it could go down, and there is no universal credit score. Agencies and lenders may assign you a score based on what data they have available for you, as well as their own scoring system. Last but not least, a credit report is a collection of data that contains all of your borrowing histories.
Why Is It Important?
Even though there are various tools for a lender to evaluate how creditworthy you are, at the end of the day, their goal is to attempt to predict just how likely it is that you’ll repay your loans. For example, a history of making your payments on time and responsibly using your credit is something that demonstrates your ability to repay a loan in the future.
Even though the main thing we’re talking about is obviously loans, the credit rating does impact a few other important things. It will impact how likely you are to get a mortgage, finance for a car, your utility payments, or even buying a smartphone on a contract. As you can see, it’s a crucial aspect of your everyday life.
What Happens When You Change Your Name?
As we mentioned, when you change your name, you’ll probably be updating all your necessary information. Whether it’s your passport or your bank accounts, everything will slowly transfer to your new name. And the next time you try to get a credit card from a new bank or apply for a car financing deal, there’s a pretty big chance that you’ll get rejected.
At first, you’ll be wondering why that is. You had an excellent credit rating, you were always on time with your payments. There’s no obvious reason for this to be happening, right? Well, if you think about it, there is. Agencies like Equifax, that take care of credit ratings, don’t know that you’ve changed your name. When you apply for a new car financing deal, they see a person with no history of borrowing, or a very limited one, and you’ll have what’s known as a thin file. This might raise a few red flags, and since such agencies are better safe than sorry, you might get rejected.
How Do You Deal with This?
The first thing you should do here, obviously, is changing your name on all open accounts. Everything that impacts your credit rating, such as payroll checks, credit card statements, phone bills and mortgage payments, should have your new name as soon as you’re done after legally changing your name. You might find that companies require that you give them a copy of the documentation that proves you’ve changed your name. By all means, take care of this as soon as possible.
Once you’re done with this, grab those documents that you have that prove you have changed your name, and make sure you have some that link your old name to your new name. Now it’s time to contact the credit reference agencies. You should be asking them to set up an alias that links your old name to your new name. This should have your problem solved, and if you had a good credit rating, it’s going to show up the next time you nee some kind of loan.
Now, a word of caution. When you’ve changed your name, it’s difficult to keep track of all the places that might have your new name and know which ones have updated to your new one. And while utilities and bills will show up at your door and you’ll be able to see, that doesn’t apply to your credit rating. Therefore, check things every once in a while, just so you’re able to sleep well.
This is a collaborative post.