The effects of divorce can linger for a long time after the settlement is final. Divorce can cause a huge strain on your credit, so it is best to plan ahead to preserve your financial future.
How To Prevent Damage To Your Credit After Divorce
- Before you can plan for post-divorce credit, you should know where you stand currently. It’s astonishing how common it is for people’s credit reports to be incorrect. So, step one is to pull your credit report. You can request a free report once per year from each of the three reporting agencies, or you can look online for free services like CreditKarma for an estimate. You’ll want to look for things like collections notices that are incorrect, lines of credit that you did not open and things of that nature. Dispute any errors you can, as they can make it difficult for you to secure new lines of credit (which you might need considering the costs of divorce).
- Although getting your credit in order makes it easier to open new lines of credit, you will want to avoid opening new lines of credit that are unnecessary. Only open new lines of credit when you have no other choice ”“ you don’t want to overextend your finances, and there are still things like attorney fees, daily expenses and unexpected expenses like security deposits on a new place to live to consider.
- Budgeting is the name of the game. Presumably, you’re moving from a two income household to a one income situation. You’re likely going to have to make some cutbacks and prioritize what is really important. Making sure you are able to pay your bills on time means that you can preserve your credit rating so that you are able to take out any necessary loans you will need (student loans, car loans, mortgage loans) moving forward in your life.
- Make sure that you close all joint accounts with your spouse before your divorce is final. If your name is still on an account with your spouse after divorce, then his or her debts and spending habits could come back to bite you.
The Denver divorce attorneys at Divorce Matters handle all aspects of family law, including preparing our clients for the financial changes they will experience post-divorce.