You have probably heard that going through a divorce can have a terrible effect on your credit, which is true. The effects are there because of the debt division and new debts (for example, when moving out of the house and starting a new life). However, there are measures you can take to minimize this effect.
Close Joint Accounts
The most obvious thing is to close all joint accounts. Call all the creditors such as banks and credit card companies and make your intentions known. Ideally, you should even send them official letters requesting the accounts closure and stating that you will not be responsible for any expenses incurred after that. Do this with the advice of your lawyer so that it won't look like you are hiding some assets or messing up with marital finances in any way.
Monitor Joint Accounts
You may not be able to close some joint accounts, especially those with some balances. You need to monitor these accounts by asking your lender or bank to send you regular statements. This will help you to know if your spouse is taking unnecessary debts or if he or she isn't servicing the ones you have agreed to pay off. This should continue even after the divorce until you have untangled all your finances.
Continue Servicing Your Debts
Very few divorces happen overnight, most of them take considerable time to finalize. During this time, you still have to pay your bills and service the loans you took before the divorce. If you don't want your credit to suffer, then you shouldn't pause any of these payments. Don't wait to settle them after divorce, because the more you delay, the more your rating takes a beating.
Take Stock of Your Credit and Create a Budget
You need to how much debt you have; concentrating on the individual and joint ones. It is also advisable to pull your credit report and understand where you stand. Next, create a post-divorce budget that allows you to service these debts. This is the time to prioritize by focusing on your needs and going easy on the luxuries. Remember, you may have to move out of the house and start paying for new utility deposits and rent.
Work closely with your bank, creditors, and lawyer to minimize the effect of your divorce on your credit. It also helps to sit down with your spouse and talk about your finances if he or she is willing to do it. If he or she is reasonable, then he or she should be cooperative because you both stand to benefit. Otherwise, just do what you can do to maintain your credit. For more information, work with an experienced lawyer from a firm like Harold Salant Strassfield & Spielberg.
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