Rebuild Your Credit After Divorce

Posted by Divorce Network, March 2010

 

Money is one of the leading causes of divorce, so it’s no surprise that many people emerge from their divorce behind the eight-ball financially and with a not-so-great credit score. Not only do you have to shell out for attorney fees and other divorce-related expenses, but you’re also probably responsible for at least a portion of unpaid bills and debt accumulated during your marriage. The end result? You’ll have to establish credit in your own name after your marriage ends—perhaps rebuilding your credit score history along the way. Here are a few tips on how to do so effectively:

 

Know your credit score

To determine how far you have to go, it’s important to know your current credit score. Many married couples have joint accounts for almost everything, so your individual credit history may not add up to a whole lot. That’s okay; establishing a positive credit history is much easier than repairing a bad credit score.

 

Start fresh

Even if you only have $20, open a checking or savings account. This will get the ball rolling on establishing a new credit score in your own name—as long as you’re never overdrawn.

Apply for a new credit card

In the past, you may have tossed the dozens of credit card applications that arrived in your mailbox every week. Now, however, you need to take a second look at that “junk mail.” A credit card in your own name—that you use responsibly—is one of the best ways to establish a credit score, but in this economic climate, it can be tougher to get a credit card company to take a chance on you than it was just a year or two ago. If you can’t get a card at a decent rate, you may need to start with a debit card, wherein you pay a certain amount up front and then use it like a credit card. Also, be sure to close joint credit card accounts that you and your spouse had before the divorce; creditors look at  all lines of credit you have access to—whether you actually do or not.

Tackle debt

You’ll blow any good credit history you’re accumulating if you don’t pay your bills, both old and new. Make at least minimum payments on debt, and if that isn’t possible, talk to the agencies you owe money to about setting up a payment plan you can adhere to. Organizations, like hospitals, may even deduct some charges from your bill if you explain your current situation. Most businesses understand that recouping some of their money is more likely when you aren’t bankrupt.  

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