A clean credit record is important anytime. After divorce, a good credit rating can help you secure needed financing for a new home, or improve your background check on a new job. Learn how to protect your credit score and avoid common pitfalls that can lower your rating and impact the next chapter of your life.
As you apply for, and maintain a credit card, automobile loan, home mortgage or other loan, you contribute information to your credit report. Your credit report contains information that identifies you, including your date of birth and social security number, among other things. It also contains your history of credit accounts, loan or credit limits, and your payment behavior.
A good credit rating is important in today’s economy. If your payments tend to be late, or low, or if you have a number of open credit accounts that show a high balance, these factors can impact your ability to gain additional credit or preferable interest rates on your next loan.
The instability of a divorce proceeding can upend a good credit rating, or make it difficult for an individual without credit to establish their credit worthiness. This means it is a priority to safeguard your credit rating during divorce.
Protect your credit score and protect your future
While some states limit how creditors, insurers, or potential employers can use your credit information, financial difficulties that make it hard for you to pay your bills on time will still impact your credit rating. Consider these suggestions to protect your credit rating:
- Know your credit lines: Identify and understand all loans, and lines of credit that are established in your name individually or jointly with a partner. At the outset of a divorce proceeding, obtain a copy of your credit report to gain an overall view of your credit history.
- Act quickly to close or separate joint accounts: While it is in the best future interests of both partners to work carefully through the division of financial obligations, it is not unheard of for one partner to abuse credit cards on the eve of, or during a divorce proceeding.
For large joint holdings, such as a mortgage, you will likely need to refinance the debt in order to dissolve joint responsibility for payment. Regardless of agreements you and your partner make about who will pay what bills, you will be held legally responsible for paying all bills for accounts on which you remain jointly named.
Sudden high credit balances on joint credit accounts caused by a vengeful partner are unfair, but you will still be responsible for paying. If this happens to you, clearly document the charges and speak with your divorce attorney quickly.
- Pay all bills: Be sure at least minimum payments due are made on accounts on which you are a named responsible party. Missed payments are registered on your credit report, and ignoring bills altogether can send your credit rating south for years.
- Get help: An experienced divorce lawyer can help you protect your financial standing. If you have difficulty budgeting, or carry overwhelming debt, speak with a debt counselor who can give you effective, helpful advice for managing and eliminating your debt. The National Foundation for Credit Counseling is a non-profit organization that exists to offer accurate information and credit counseling that is no or very low cost.
Divorce can shatter a fragile financial picture, so get skilled legal help to protect your solvency and move toward a bright future.
Work with a trusted divorce and child custody attorney in Baltimore
When you have questions about dividing financial obligations and assets during divorce, or other divorce issues, the Law Offices of Allyson B. Goldscher, LLC provides trusted legal representation and straightforward, compassionate legal counsel. Contact us or call 410-602-9522 today.