Going through a divorce means preparing for a new phase in your life. You may be faced with moving to a new home or adjusting to life in your home without your former spouse. You may also be living with the aftereffects of a big spending spouse who has maxed out your joint credit, leaving you to pick up the pieces. This major life change may mean that you’ll need to spend some time repairing your credit.
How to Repair your Credit After Divorce
During such a stressful time, it can be challenging to decide where to start if your credit is less than perfect. The following tips can help you evaluate your current credit situation and work to improve it.
1. Order a copy of your credit report.
There are three credit reporting agencies: Equifax, TransUnion and Experion. You can get a copy of your credit report at no charge once every 12 months from each of them through a centralized site called AnnualCreditReport.com.
The credit report will show you the credit accounts you have open and how much you owe to your creditors. Review it carefully to look for errors (accounts that don’t look familiar, have been paid off and closed but still appear on the credit report, etc.).
In case of an error, you can address it immediately online. If there’s legitimate debt that you simply don’t know how to deal with, or can’t shoulder financially, call the creditor for help. Most lenders will have some kind of assistance program for people in your situation.
2. Close any joint credit accounts.
If your name is on any joint credit card accounts, consider closing them down. It’s important to note that this doesn’t erase the debt or your responsibility for paying a portion of it. You do want to make sure that no new debt is added to the account, though, since you will also be responsible for those charges as long as your name is still on the account.
Alternatively, you can contact the credit card company and speak to a customer service agent to find out how to have your name removed from any joint accounts. You may need to write a letter to the credit card company to remove your name from the account.
3. Make a budget based on your new financial circumstances.
Since your goal is to repair your credit after your divorce, you’ll want to make sure you are living within your means. The reason people don’t like the word, “budget” is that it sounds a lot like “diet” and they think it means they will have to deprive themselves of all enjoyment and luxuries.
No one looks forward to drawing up a budget, but this financial roadmap gives you a way to see where your money is going so that you can make solid plans for your future. There are even apps like Mint by Intuit that are easy to use and help you monitor your monthly spending. If you’re going through divorce review the spending you have already accounted for on your Case Information Statement.
4. Apply for a credit card in your name only.
There are many options available if you are looking to open a new credit card account. You aren’t limited to the credit cards offered by your own bank. It pays to consider multiple options. Go online to CompareCards.com to see a selection of credit cards in categories such as balance transfer, low interest, no annual fee, gas and more.
5. Pay your bills on time.
One of the best things you can do to repair your credit after divorce is to pay your bills on time. If you are the type of person who finds it challenging to keep track of due dates for bills you need to pay monthly, take advantage of automatic withdrawals for regularly-occurring payments so you won’t be late. Most creditors offer this payment option.
6. Ask for professional help.
Don’t hesitate to ask for professional help to get (and stay) on track. Your lawyer can help by ensuring that you and your former spouse have a written financial agreement in place. For example, it could state that both of you will pay a certain amount toward paying off joint credit card accounts, and that the credit card account must be paid in full by a certain date. This will help your credit rating and give you something for the court to enforce if your former spouse fails to follow through.
Another route would be to approach your bank or an independent financial adviser for help with budgeting and managing your money. Sitting down with someone who can review your situation from the outside can often be helpful, since the other person can more easily point out what is working well for you and where potential pitfalls may lie.
Divorce is never an easy time. It’s a major life change and one of the most stressful experiences you can go through. It doesn’t mean you have to take on all these changes alone. The Rodríguez Law Firm has help people just like you through tough divorces — we’re here to help. Just give us a call at 862-241-1228 or send us an email to get on the road to your new life.