Rebuilding Your Credit After Divorce
Nobody wants to see their marriage end, but sometimes it happens. When it does, it’s a major event that affects your life in many ways. You may have to find a new home or get another job. You’ll have to share custody of the kids.
Life is no longer the same, especially when it comes to finances. A divorce pretty much splits everything in half, so you’re bound to come out of a divorce with financial issues, including massive debt. And you’re likely to be in debt after paying divorce-related legal fees, which can be about $15,000, on average. This can greatly affect your credit score, whether or not you had financial problems before the divorce.
A poor credit score limits your opportunities for loans and mortgages. This means that if you’re considering a house or a new car in the future, you may need to wait a while until you can get your score up. In the meantime, here are some things you can do to rebuild your credit.
Keep Paying Your Bills on Time
A huge factor in determining your credit score is your payment history. When you pay your bills on time, your score increases. When you don’t, it drops. So no matter the bill — whether it be a credit card, medical bill, or utility payment — make sure to pay it on time.
Create a Budget
In order to have enough money to pay your bills on time, you’ll need to take a look at your income and debts and create a budget. A budget helps you manage your money and allows you to see where your money is going so you can make better financial decisions. You can see where you can cut back on expenses.
Establish Your Own Credit History
If you have up to now only been an authorized user on your ex-spouse’s credit cards, it’s time to establish your own credit history. Having your own credit card and using it responsibly is the best way to raise your credit score. You may need to start out with a secured credit card if you have no credit history of your own.
Keep Balances Low
Once you get a credit card (or two), keep the balances low. Just because you have a $5,000 limit doesn’t mean you need to spend that much. Ideally, you want to keep your utilization under 30%. So for a $5,000 card, that means you should keep your balance under $1,500. It’s also a good idea to pay off your balance each month to avoid high interest rates.
Seek Legal Help
A divorce can affect your life in many ways, including your credit score. It’s important to keep your score up if you want to qualify for auto loans, mortgages, and other loans in the future.
Fort Lauderdale divorce lawyer Edward J. Jennings, P.A. can help you during and after your divorce. Get the financial advice you need to succeed after ending your marriage. Call our office at 954-764-4330 or fill out the online form to schedule a consultation.