3 Financial Hacks to Salvage Your Credit Score After a Divorce
Getting a divorce is one of life’s messiest situations, emotionally, logistically, and financially. You’re certain to feel intense sadness, but also perhaps a newfound feeling of freedom as well. You have to sift through your pile of shared possessions and figure out who’s keeping what and who’s responsible for what. And you have to divvy up finances–something that might be more simple if you have a prenuptial agreement, but can throw both parties totally off-balance if they aren’t prepared.
When it comes to your all-important credit score, a divorce has no direct impact–but that doesn’t mean you won’t feel the indirect consequences. Whether it’s an angry or irresponsible ex running up your joint lines of credit, whether you have to take out new loans to cover previously shared costs, or whether you start missing payments in all the chaos and stress of the divorce proceedings, it’s not uncommon for newly divorced individuals to need to spend some time and energy rebuilding their credit scores. Here are just a few financial tips for fixing your credit score after your divorce:
1. Split debts with your ex
As part of your divorce process, you’ll want to make sure that all your shared debts are split appropriately with your ex-spouse. If the two of you took on debts or took out lines of credit that were a joint decision, it’s not necessarily fair to let one person stay on the hook for the entirety of something that the two of you were previously splitting between multiple incomes.
Sometimes this can mean dividing up shared debts into individual debts, eg: you take on one car payment while your ex-spouse takes on the other. Alternatively, it can mean coming to an agreement on paying down shared debts that may not make sense to split, like joint credit card debt or student loan debt taken out for your children.
One of the best ways to do this is by first checking to see what all is on your credit report. Finding a great credit monitoring service can ensure that you know everything that’s affecting your credit score and can see where each debt comes from, how much is left, and dictate the best path towards splitting it up or paying it down.
2. Set up your own lines of credit
For people who’ve always lived financially comfortable lives, this can come as a bit of a surprise, but lots of people never really have their own credit history before becoming married. Someone who’s never taken out a loan or never opened a credit card may open joint accounts shared with a spouse, which can be great for starting to build credit. However, when the couple gets divorced and these credit lines close, one party may find themselves without any credit to their name, which can severely impact their credit score or credit growth potential.
It sounds odd to say, but it can be helpful to take out new lines of credit after a divorce if this applies to you. Having debt in your name may be a bit of an added stressor, but if utilized and paid down responsibly, it can help strengthen your personal credit score now that you aren’t attached to a spouse who was previously helping it along.
Just be sure to practice safe credit habits: never take on more than you can afford, stay well below your monthly limits on credit cards, and make payments on-time, every single month. If you do this, you’re well on your way towards financial independence from your previous marriage!
3. Set automatic monthly payments
Experts agree: the single most important factor in determining your credit score is making payments on time, every time. Other factors certainly apply, like credit utilization, length of credit history, amount owed, etc, and they can’t be ignored. But your payment history represents over one-third of the weight of your credit score, so if there’s one thing you can’t let slide, it’s paying the bills on time.
Divorce means plenty of chaos in your life, from meetings with attorneys to mediation to visitations with children, and it’s easy to lose track of your bills in the process. So for the recently divorced, one of the greatest ways to build your credit without even thinking is to set up automatic monthly payments so you never miss a single bill.
We understand that–especially for those with heavier debt–that making full payments may not always be possible. But even if those automatic repayments are just for the minimum payment amount, it still means you’re hitting that target of making each months’ payment on time, every single month. From there, you can make manual payments to help further pay down the interest and principle as you’re able, but you can sleep soundly knowing that your payment history will be helping rebuild that credit.
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Like it or not, your credit score can touch just about every aspect of your life. It not only impacts what sorts of loan rates you qualify for, but it can also affect your ability to get jobs, apply for housing, and so much more. So if you’re going through a difficult divorce, it’s important to ensure that you’re safeguarding your credit score and working to rebuild it if it’s been impacted by the resulting fallout.
Divorce is an exceedingly difficult process for everyone involved, and financially, it can leave many individuals needing a bit of help. At Spotloan, our simple online application process can help you qualify for the money you need, even if you have bad credit or need a loan quickly. All you have to do is go fill out our application to see if you qualify, and you could receive a decision within minutes. Fill out our application now!
