How to rebuild your credit after a divorce

In many marriages, one spouse usually handles the bills while the other earns money or takes care of the children. That’s why after a divorce, one spouse could be in for a surprise when it comes to their credit rating.

Some newly divorced spouses consider bankruptcy as they look at their finances, but there are other steps a lawyer can help you to manage before you resort to a legal remedy.

Get a credit report

You can see your credit report through each of the three credit bureaus – Equifax, Experian and TransUnion – while there are also services that will pull all three for you at one price. When looking at your report:

• Examine it for any inaccuracies and report them to the credit bureau right away for correction
• Look for any joint accounts you still hold with your ex-spouse. Cancel them immediately
• Look for any accounts that should have been closed. If you find any, close them immediately
• Remember that debts assumed during the marriage are both spouses’ responsibility. You can negotiate with your spouse to assume some of those debts but the lending organization (bank, auto finance, credit card company) will hold you both responsible in case of default
• If you’re going to change your name, then do it before you start applying for credit. That way, the credit will be under your new name and not the marriage name. You can also contact existing creditors to get your name changed on those accounts
• If you make any changes on your credit report, recheck the report a month or two later to make sure the changes have been made

Other post-divorce credit tips

Determine how much money is coming in each month. Stay within a budget and pay your bills on time. This will help you improve your credit score.

Consult with a financial advisor or credit advisor if you have a difficult time paying your bills. Consult a lawyer if bankruptcy is your best option.

Get a credit card of your own. Keep the balance low and pay the balance on time each month. Don’t rack up debt and don’t pay only the minimum each month. The credit card is a tool to improve your credit, not to finance purchases you can’t afford. A good rule of thumb is to keep your balances below 30 percent of the credit limit.

Talk to a qualified financial planner to wade through your post-divorce finances. For some people, bankruptcy is the best way out of a bad financial situation. That’s when you need a high-quality lawyer to help you make good decisions.