When some people think about getting divorced, they think about the split in general terms — how they are going to be able to afford renting an apartment and paying monthly bills?
But often, soon-to-be divorcees don’t consider the financial implications beyond those basic terms. A recent article on Nasdaq.com looks at how divorcees can expect to build their credit after a divorce. When people are tied together financially, they may not realize how some joint decisions have affected their standing with creditors.
This is especially true today, as many Americans have seen their credit scores fall significantly as they deal with foreclosures and short sales after their houses have depreciated in value. If a couple has lost their house to an Indiana foreclosure, it’s possible that their Indiana divorce is going to feel the effects.
The job of an Indiana divorce lawyer is to do what is in the best interests of the client under the laws of the state. Division of assets and child custody or child support issues are going to be big in the eyes of the divorcees.
But a lawyer should also be thinking about the things not considered by the client. That often includes tax implications of getting divorced, how their debts will be paid off and who will be responsible for certain costs incurred by both parties.
The article offers some tips for divorcees about how to improve their credit scores after they complete a divorce. A joint credit score may get them by in life, but once they split, they can be exposed for having poor credit and that can leave them helpless if they don’t have a good credit score and can’t obtain loans.
Pull the credit score: The first step is to see where the divorcee stands. Scouting the files for late payments or collection accounts can help point out red flag issues that will hurt the person’s chances of getting credit in your own name.
About 70 percent of Americans don’t do an annual credit check, which they can do for free under federal law. This often leads to people bringing financial baggage into a marriage and they can leave the marriage with that same baggage when they try to go out on their own.
Fix any credit report mistakes: This is critical because if there is inaccurate information, it can make moving forward that much more difficult. Creditors and banks can misreport data and only you can correct it. Even if a divorce agreement states who should pay off which joint debts, if they don’t, it can hit your credit score.
Nix the joint credit obligations: A divorce is about splitting and cutting off financial ties. The last thing you want to do is hold any joint accounts anymore. As mentioned above, the other spouse could continue using a credit card account in both people’s names and if they make late payments, it can affect your score, too.
Open a secured credit card: Secured credit cards can help people with poor scores build their credit. Secured cards require people to deposit an amount into the account, which creates your spending limit. This gives the creditors some assurances that you will pay.
Pay all your debts on time: The last thing you want to do is start getting behind on payments right out of the gate. Thirty five percent of your FICO score is based on your payment track record. So, missing payments can sink you in a hurry. Pay on time and you can start to get your credit fixed.
Highland Divorce Attorney Burton A. Padove offers free and confidential appointments on family law matters throughout Northwest Indiana, including Munster, Lansing, Porter and Crown Point. Call 219-836-2200.
More Blog Entries:
Financial Hit of an Indiana Divorce May Be Tougher for Stay-At-Home Moms: November 21, 2011
Financial Problems a Divorce Risk in Indiana — Legal Help Minimizes Risks: October 31, 2011