Rebuilding Your Credit After Divorce
Divorce can be one of the most stressful events in a person’s life, on par with losing a job or the death of a family member. One of the more stressful elements of divorce is trying to sort out money issues and start over financially as a single person rather than as part of a married couple. Illinois residents throughout the greater Chicago area facing divorce should be aware of their credit scores and how to build or maintain good credit as they begin their lives after divorce.
Why Your Credit Scores Matter
Credit scores impact many parts of people’s lives. There are three national credit reporting agencies: Experian, TransUnion and Equifax Credit Information Services. Every time a person applies for any type of credit – for a home mortgage, credit card, auto loan, apartment lease or even phone installation – the institution will check the applicant’s credit rating. Individuals with lower credit scores usually end up paying higher interest rates for credit or they are denied credit altogether.
Tips For Building Credit
Some people find that they are starting at a disadvantage after a divorce because of financial decisions their spouses made, such as opening accounts in both parties’ names and then failing to pay the bills. Others face challenges because they did not work outside the home while married, so they have no income to report as their own. However, people going through divorce can take the following steps to build credit as individuals rather than as part of a married couple:
- Examine credit reports: People should know what creditors are seeing by examining their own credit reports. This gives individuals an opportunity to correct errors as well as spot any accounts of which they are unaware.
- Obtain employment: The person who did not work outside the home while married should take immediate steps to secure employment so potential creditors view them as less of a credit risk.
- Evaluate joint accounts: People should consider closing joint accounts when going through a divorce. Similarly, credit cards upon which a spouse is an authorized signer should be re-evaluated because their spouse’s actions can potentially influence their own credit rating.
- Consider a secured credit card: A person who has trouble obtaining a credit card may want to consider a secured credit card to build a positive credit history.
- Maintain a good history of timely installment payments: Making timely installment payments on your mortgage, car loan and credit cards will enhance your credit score.
- Use credit cards in moderation: Eliminating debt is always a good idea. Avoid using all your available credit on credit cards. Even if you pay your balance in full each month, using a significant amount of your credit line each month can reduce your credit score.
We Make Divorce Easier To Navigate
Divorce, and all the changes that it causes, can be stressful. Seeking the guidance of an experienced family law attorney can help alleviate some of your anxiety. Contact Greenwich Law Group, LLC, today if you are considering divorce and, more importantly, before taking any of the actions listed above. Our lawyers represent clients throughout the greater Chicago area from offices in Barrington and Chicago. Contact us at 847-382-3995 (Barrington) or 312-558-9700 (Chicago), or send us an email today to set up a consultation.