Rebuilding Your Credit After Divorce

A divorce is emotionally difficult and turns your life upside down. You have to figure out how to live on your own again, and finances are a challenge when you have been depending on another person’s income for years while living together. Take a look at your credit score and evaluate what you need to do in order to improve that score and get back in good financial standing on your own merit. This can be a challenge if you have not been keeping close track of your credit score in recent years. Still, it is manageable with the following tips.

Deal with Bad Debt

Even in a case where the divorce is final and the judge ordered your spouse to handle a specific debt, if it is left unpaid and your name is associated with it, then it has a negative impact on your credit. Therefore, it is important to deal with all the outstanding debt. If your spouse is failing to handle it, the first step to try is to send a letter of explanation and copy of the court order to the credit agency. However, their main interest is getting their money, so they may continue to pursue you to handle the debt even after receiving this information. At that time, it is important to weigh what is more important: having good credit or having your ex handle that specific account. He or she may never plan on handling that debt, so you may need to pay it off in order to start improving your credit again.

Establish New Credit in Your Name Only

This is where having a lawyer on your side is going to be helpful, so consider putting in a call to SM Law Group today. Some companies understand divorces happen, and they are willing to issue a credit card to you alone. Others will need a letter from a lawyer to push them in the right direction to close joint accounts and issue you a card and account in your name. This is particularly important for those joint accounts where you both are authorized users. Failing to close these accounts means your soon-to-be ex-spouse can use the account or allow someone else to use the account in your name and run up bills and bad credit.

Avoid Post-Divorce Spending Sprees

We all know that even an amicable divorce leaves scars, and amicable divorces are in the minority. Therefore, you may want to go out and make a big purchase or take out more credit to buy something to show you are starting a new chapter in your life. Reconsider that idea if it will put you in a bad spot with balancing the money you make and the amount that is going right back out to pay bills. Remember that you are down to living on what you bring in only, rather than two incomes, and it may take a while to get on your feet. Adding a new expense is not the way to show your post-divorce financial savvy.

Pay Bills On Time

One important thing you can do to improve credit, and one that is difficult for many people, is to keep paying bills on time. That means your car payment, your rent and even your utilities like gas and electric. These payments reflect positively on your credit score when they are not reported for lack of payment. That shows your creditors or a potential creditor that you can be relied on to pay bills.

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