Building and maintaining a good credit score during and after your divorce is important. You may need a good credit score to get set up in your new life, such as purchasing another home, buying a car or refinancing shared assets. Even renting an apartment might require a credit check. Are you prepared?
If you do not yet have a credit score, you might become more focused on building one. This takes time, so the sooner you start, the better.
Building your credit
If you shared credit accounts with your partner, this might already affect your credit score. If they have good credit, this works in your favor. Even if they have bad credit, at least you now have a history that banks can draw on.
Experian offers the following advice to help you build your credit independently, regardless of your starting point:
- Start with an easy-to-get credit card with a small limit and work your way up.
- If you cannot get a regular credit card, consider applying for a secured credit card.
- Ask a trusted family member or friend to cosign on any necessary loans you do not qualify for or to get better rates.
Experian does not mention this, but some people also take out small personal loans of $500 or so to build their credit. This is an installment loan, so it improves your credit mix.
Protecting Your Credit
If you already have good credit, there is a lot at stake in a divorce, but you have a great chance of getting your independent life on track quickly. Experian recommends separating joint accounts as soon as possible. When deciding who gets to keep what asset, if it is not fully paid for, you should also make considerations for the eligibility of the person carrying the loan.
Finally, it is important to keep up with bills, even when complex decisions are taking place and tempers flare. If the bills are in your name and they go unpaid, it might cause delinquencies in your credit history. It is a good idea to ensure your name is not on any remaining bills that you do not intend to take care of yourself going forward.
The more you have to lose in a divorce, the more complex the property division process becomes. While assets are important, your ability to acquire new ones, i.e., your credit score, is also important.