If you are recently separated or divorced it is important to maintain good credit. If you allow your credit score to fall you may have difficulty buying or renting a home, obtaining insurance, buying or leasing a car, or finding a job. So, what can you do to maintain or improve your credit especially when you may feel overwhelmed financially?
Amy and Curtis Arnold, in their Huffington post article, How to Improve your Credit Score After Divorce, have the following suggestions:
Establish New Credit: Closing joint accounts and establishing accounts in your own name is a good step toward maintaining good credit. Initially, your credit score might go down because you have less credit available to you, but if you reestablish credit, that dip should be temporary.
Review your Credit Reports: You are entitled to a free credit report every 12 months from the three credit reporting companies, Equifax, Experian, and TransUnion. Go to annual credit report, to request all three. Once you have the reports, carefully review them and determine which accounts are held in your name and which you are a joint holder. Sometimes a spouse opens an account listing you as a joint or authorized user without your knowledge, which is why it is important to review your credit report.
Pay Bills on Time: If you are considering paying bills late, or worse, not paying at all, you should reconsider. This action could be extremely detrimental to your credit. One missed bill payment or a late mortgage payment could affect your ability to purchase a home and/or open accounts in your own name down the road. If you think you might be late with a payment, contact the lender or creditor, explain your situation, and ask for an extension. While there is no guarantee that they will agree, if they do, your credit will not be damaged, so long as you pay according to any new agreed upon terms.
Work with a Family Law Attorney: Mr. Arnold’s article recommends working with an attorney who focuses on family law. Having an attorney who you trust and who can advocate for you is important at this time when emotionally you may not be able to make rational or reasonable decisions. If you and your spouse are not able to agree on finances, a family law attorney, such as Geraldine Welikson Hess at Hess Family Law, can help you review your options and seek assistance from the Court when necessary.
Educate Yourself: If you were not the spouse in charge of finances, now is the time to educate yourself. Read articles, talk to a financial advisor, and gather information. Knowledge equals empowerment.
Be Wary of Retail Therapy: Divorce can be emotionally difficult. Oftentimes people turn to retail therapy to ease their pain. However, this could lead to significant debt and/or depleting savings. Before making a purchase, determine whether you really need the item. Ask yourself why you are buying the item and think about how it will affect you financially down the road. You may also benefit by talking with your attorney and/or a financial advisor about the pros and cons of spending vs. savings while you are going through the divorce process. Taking a moment to consider options often leads to better financial decisions.
