Going through a divorce means you are starting over in many ways, and unfortunately, your credit is not immune to the process. You may find that the financial freedom you enjoyed as a couple comes to a halt when your income is suddenly limited as you attempt to navigate a single life with possible debt, the cost of getting a divorce, and paying for essentials on your own. To avoid finding yourself in a financial slump, it is important to protect your credit score as early as possible.
Doing so requires a bit of vigilance on your part. In fact, getting your balances on accounts before your assets are divided not only provides an accurate picture of debt to a judge, but it can also come in handy if your ex-spouse attempts to rack up debt in your name during the divorce.
How Does Divorce Impact Credit?
Keep in mind that New Jersey is an equitable distribution state, which means both assets and debts will be divided based on what is fair, but not necessarily equal. This means that one may walk away with more assets on paper, such as the house, while the other appears to have taken on more debt to offset the money gained by being freed from paying the mortgage. Either way, both credit scores may fluctuate before they become stable again. Your ability to prove that you can still pay your bills on time will go a long way in re-establishing your financial health.
Additionally, joint accounts such as credit cards, car payments, and mortgages can have an impact on your financial health. Although a judge may divide debt during divorce proceedings, your ex-spouse’s failure to pay a bill could affect your credit negatively. Therefore, it is important to close any joint accounts and reopen them as individual accounts as a measure of protection.
Your ability to obtain loans and credit may also be slightly stifled after a divorce. This is because you can no longer rely on your ex-spouse’s income to make these requests. Essentially, you are down to one income, which is also impacted by how much debt you currently have. Therefore, it is important to pay off revolving loans quickly following your divorce to secure a lower debt-to-income ratio, which is the number credit bureaus rely on to determine your financial stability.
What Can I Do to Rebuild My Credit?
Depending on the severity of the hit your credit score takes, it may take some time to rebuild. However, small steps and persistence will eventually pay off.
First, get a credit card in your name only. This will help to re-establish your credit and prove to lenders that you can make payments on time. If your credit has taken a substantial hit, you may have to consider a secured credit card, which is specifically designed for individuals who are trying to rebuild their financial stability. In this case, you are required to put a deposit down on the card, which is then used to make payments.
Next, monitor your credit report. Pay attention to whether your ex’s missing a payment is negatively impacting your credit. If so, contact your lenders immediately to explain the situation and determine how to correct it early before it spirals out of control.
Protect Your Finances and Your Future With Assistance from the Cherry Hill Divorce Lawyers at Burnham Douglass
If you are involved in a contentious divorce that is negatively impacting your financial status, find out how the skilled Cherry Hill divorce lawyers at Burnham Douglass can help. Call 856-751-5505 or contact us online to schedule a free initial consultation. Located in Marlton and Northfield, New Jersey, we proudly serve clients in South Jersey, including Marlton, Evesham Township, Cherry Hill, Camden County, Burlington County, Northfield, and Atlantic City.