How Do You Protect Your Credit Score During a Divorce?
Divorce can have adverse consequences, not least of which could be damage to your credit score. Although your marital status is not included in your credit report or factored into your rating, it can indirectly lead to financial situations that can hurt your credit. However, there are steps you can take to help protect your credit if you are going through a divorce.
Our Chicago family law attorneys at Nottage and Ward, LLP, can advise you on how to protect your credit. Call us at (312) 332-2915 for the dedicated legal guidance you need before, during, and after divorce proceedings.
How Can Getting Divorced Hurt Your Credit?
Many couples today have two incomes to meet their expenses and pay their bills. Losing one of those incomes can cause financial strain that might result in missed or late payments on loans, credit cards, or bills. Payment history is an essential factor in credit score rating, and missing payments or late payments affect your score.
In divorce proceedings, the judge may declare that one spouse is responsible for paying certain jointly-owned debts. If that occurs, and your spouse fails to make a payment, it will impact your credit report as well your former spouse’s. The original loan or credit card agreement still stands, regardless of what is stated in your divorce decree.
What Can You Do to Protect Your Credit After Divorce?
Level of debt and payment history are the two primary factors affecting credit. The best things you can do for your credit during and after divorce are to minimize your liabilities and maintain a positive payment history. This may include:
- Adjusting your lifestyle and living on a budget: This could involve significant changes such as selling your home and moving to a less expensive place, or refinancing or selling your car.
- Closing joint accounts: As soon as possible after you realize divorce is imminent, begin severing financial ties with your spouse. Use recent billing statements and your credit report to make a list of all jointly-held accounts, then close them by phone and in writing, instructing creditors not to re-open them.
- Remove your spouse as an authorized user on your credit cards: This step will prevent your spouse from running up a balance for which you will be responsible. Check with your lawyer before closing accounts if your spouse is financially dependent.
- Get the debts you are responsible for in your name only: This can be accomplished by transferring credit card balances to another card and refinancing loans. While you, your spouse, and your attorneys are working out the details or pending the court’s final decision, keep making at least minimum payments on accounts that can affect your credit.
- Do not rely on your spouse to make payments on accounts with your name on them: If your spouse is responsible for paying accounts in your name, keep track of the due dates, check the payment status, and if necessary, make the minimum payments yourself. You can ask the judge to have your ex-spouse reimburse you for those payments.
- Try to cover primary expenses out of your own income, not spousal maintenance or child support: If you cover the essential items out of your own funds, you will not be in as much financial trouble if your spouse skips payments, tries to have amounts reduced, or quits his or her job.
Divorce is challenging. Our experienced Chicago divorce lawyers at Nottage and Ward, LLP, can help. Contact us for strong representation in the difficult and complicated matter of divorce.
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