Going through a divorce can be stressful, and it can have a significant emotional and financial toll on your life. You may not necessarily consider how ending your marriage can affect your credit score until you see the effects of a decrease when applying for a loan or credit card.
Your credit score refers to a number that is based on an analysis of your credit information, and this number represents your creditworthiness. That is, your credit score reflects the probability that you will repay a debt or loan, such as a mortgage. According to FICO, which calculates credit scores in the United States, the amount of debt you have makes up 30 percent of your credit score. Therefore, the lower your debt, the higher your credit score. Protecting your credit during your divorce is essential for maintaining a secure financial future.
Tips For Protecting Your Credit
During your divorce, it is important to consider all the ways your finances may be affected. For example, if a joint account from your marriage is left open, your ex-spouse may miss a payment, default on the loan, or add to the balance owed. If both of your names are still on the account, you will be held responsible for the debt, even if you did not use this credit card or bank account.
If you are unable to pay a credit card balance in full, you should pay the minimum amount required, and make sure to do so on time. Try to avoid maxing out your credit cards, as that will put an additional burden on you to pay them off.
In some cases, people who are in the midst of divorce may want to spend money in an attempt to cheer themselves up, or it may be necessary to purchase new items such as furniture for a new home. Even though you might feel like treating yourself, you should rethink the temptation to splurge. You will not want to incur a large amount of debt that you may not be able to afford on one income.
Here are some other helpful tips for safeguarding your credit score during your divorce:
Close any joint bank or credit card accounts.
Refinance your mortgage or sell your home and divide the proceeds.
Keep paying bills on time.
Notify creditors/lenders about the divorce.
Get monthly statements on any outstanding accounts.
Avoid extravagant spending.
Use credit cards wisely.
Check your credit report regularly.
Place a “freeze” on your credit.
If your ex-spouse was ordered to pay certain joint debts in the divorce agreement, and he or she did not meet those obligations, you may want to pay those debts yourself in order to maintain a good credit rating. If necessary, you can go back to court to secure a judgment against your ex for not following the court’s orders.
Contact a Wheaton, IL Divorce Lawyer
Divorce can significantly impact your financial status. Whether it is due to losing the other spouse’s income or having to pay the expenses involved in moving to a new home, you may rack up a lot of debt. The Andrew Cores Family Law Group has handled many types of divorces, including high-asset or complex cases. If you are concerned about how your divorce will affect your credit score, our tenacious DuPage County divorce attorneys will work with you to determine the best way to keep your credit score intact. To schedule a free consultation, call our office at 630-871-1002 today.