Divorce, even when amicable, is a stressful and emotional experience for everyone involved. In a divorce, you not only have to come to grips with the fact that your marriage is over, but you also have to determine how to divide your assets and debts. Many newly divorced people will see a hit to their credit score that they weren’t expecting and need to spend months or years digging themselves back up to a good score. Luckily, there are ways you can avoid taking a massive hit on your credit score. Here are the most valuable things to do before, during, and after your divorce.
Lower your credit utilization rate
Your net worth may drop after your divorce and affect your ability to get credit quickly. Since you’ll be down to one income and may lose half of your assets, you must start reducing your debt load now and improving your credit utilization rate. Create a strategy for quickly becoming debt-free by using this debt repayment calculator so that you’ll be able to walk away from your marriage as financially unscathed as possible.
Close your joint accounts and remove authorized users
Joint accounts and authorized users will stay active on your credit history regardless of your marital status, so you’ll need to actively close these accounts and remove your ex as an authorized user on your credit cards. You may think your ex won’t do anything terrible to your accounts if the divorce was amicable, and it’s likely they won’t. That said, it’s just a good idea to dissolve any accounts that won’t be used anymore anyhow, and making it a priority ensures nothing unexpected happens to your finances.
Keep your oldest credit card open
Since your credit score will be in flux while your financial status settles, keeping track of the small details can go a long way towards keeping your credit report stable. One factor that affects your credit is the average length of time you’ve had open credit lines. Your average age of credit isn’t as significant a factor as your credit utilization. Still, any small step in the right direction can prevent your credit from tanking once you’re divorced. If you can keep your oldest credit card open, it may mitigate some of the damage done to your score.
Review your credit report regularly
Things will take time to settle on your credit report, so keeping an eye on it while finalizing your divorce can ensure no mistakes are made. Check the accounts open in your name, credit balances, age of credit, as well as your personal information like address, job, and name (if you’ve changed it during the marriage.) Your creditors can take a few months to report changes to the credit bureaus, so don’t worry if nothing changes the first month or so. However, if there are errors after you’ve been divorced for more than six months, contact your creditors and the credit bureaus to see what’s going on. You might need to file a dispute if there are significant errors or credit accounts opened in your name that aren’t right.
The bottom line
If you’re facing a divorce and are worried about the impact on your credit, the steps above will help protect your credit rating and keep your finances on track.