Divorce is a challenging time, and its impact may extend beyond your emotional well-being to your financial health. Your credit score, which measures your financial stability, may be at risk during this challenging period.
Understanding how divorce affects your credit and the steps you may take to protect it could help you maintain financial stability throughout this life change.
How divorce may impact your credit score
While divorce may not impact your credit score directly, the financial changes that come with it may. Joint accounts, shared debts and income changes may potentially lower your credit score if not managed properly. Overdue payments, increased credit utilization and the closure of long-standing accounts are common issues that may arise during a divorce and negatively impact your credit.
Steps to protect your credit during divorce
To protect your credit during the divorce process, consider these steps:
Separate your finances
It may be a good idea to begin separating your finances from the other party’s as soon as possible. Close joint accounts and remove your name from shared credit cards or loans. This step may help prevent your ex-partner’s financial decisions from affecting your credit score.
Monitor your credit regularly
You may want to closely monitor your credit report during and after the divorce process. You may have access to a free credit report annually from each of the three major credit bureaus. It may be beneficial to review these reports carefully for any mistakes or suspicious activity.
Communicate with creditors if necessary
If you struggle to make payments due to the financial strain of divorce, consider contacting your creditors. They may be willing to create temporary payment plans or hardship programs to help you avoid overdue payments and protect your credit score.
Maintaining good credit post-divorce
After finalizing your divorce, you may want to focus on rebuilding your credit if necessary. You may want to:
- Pay your bills promptly
- Keep a low credit utilization
- Avoid opening too many new accounts at the same time
- Consider using a secured credit card to help rebuild your credit if needed
Protecting your credit score during and after divorce requires vigilance and initiative. Consider seeking legal advice. An experienced attorney can help protect your interests and assets during and after your divorce.