Marriage is like a tangled web. It reaches into every corner of a your life, and if you pull on one thread, it affects the rest of the marriage. That is why divorce can turn your life upside down in many unexpected ways. Aside from the impact on your emotions and your social life, your divorce can have a long lasting effect on many aspects of your financial status. One of the most commonly overlooked areas that a divorce can affect is your credit score.
In California, community property is the law of marriages. This means that while you are married, many of your debts and obligations generally belong to both you and your spouse. So, when the marriage ends, the effect on your credit rating can be devastating, affecting your ability to buy or rent a new place to live, get better pricing on insurance premiums, or even obtaining a job.
With that in mind, you should know some basic tips for protecting your credit rating against the impact of a divorce, especially if you were not the primary wage earner in your marriage.
Get the Complete Picture
Knowing what debts you are responsible for is a key step to making your credit rating reflect the spending for which you are personally responsible. To gain that knowledge, you should request your credit report from the three major reporting agencies (Experian, Equifax, and Trans Union). By federal law, every person is entitled to one free report every 12 months, which you can request online.
Many times, a spouse will open a joint account during a marriage, and never think to tell the other spouse that there is a new account in his or her name. Your credit report will help you sort out which accounts you should keep, and which you should close.
Cut the Cord
The next step is to begin closing out your joint accounts so that your ex-spouse’s spending no longer affects yours. While this may initially cause your credit score to drop because you will have less available credit, your score will likely rise once you assume control of the accounts you will retain.
You should also contact the credit card companies that you decide to stay with to have them issue new cards and new numbers in your name alone. This will prevent your ex-spouse from continuing to use your account, and will ensure that your score reflects only your own credit card usage.
Build Your Own Financial Record
Another step in the process is to begin to build a record of your own. First, you should open a checking and/or savings account in your own name, so that you and only you can directly control your money.
Next, consider opening one or two new accounts. A newly issued card is a great way to build a credit history because many credit card companies offer incentives such as zero interest for the first few months, or a break on balance transfers from other accounts. This can help you cut down the interest payments and concentrate on paying the principal while you rebuild your credit. Be sure, however, to not open too many accounts, as this can negatively impact your score.
Pay Your Bills on Time, Every Time
This is probably the most difficult step, especially if your ex-spouse handled the monthly obligations. You need to develop a schedule so that you know when your bills are due, and that you make the payments on time to avoid late payments, which can send your credit score into a downward spiral. It will be challenging at first, but like anything else for which you have had to train, sticking to a schedule will help paying on time become a habit.
Focus on your obligations in this order, including any joint obligations you have left from your married accounts, such as:
- Credit card and installment loans, such as mortgages, car loans, or student loans
- Rent payments
- Utility bills (including cellphone bills)
The Family Law Attorneys at Wallin & Klarich are on Your Side
If you are planning a divorce, it is important that you understand every step of the complex legal process, especially when it comes to how the law affects your independent financial life once your marriage is legally over. At Wallin & Klarich, our skilled and knowledgeable divorce attorneys have over 30 years of experience helping clients obtain the best possible outcome in their divorce. If you choose Wallin & Klarich to guide you through the divorce process, you can trust that your case is in very capable hands.
With offices in Los Angeles, Sherman Oaks, Torrance, Tustin, San Diego, Riverside, San Bernardino, Ventura, West Covina and Victorville, an experienced Wallin & Klarich family law attorney is nearby no matter where you are located.
For a free, no-obligation phone consultation, call us at (888) 749-7428 today. We will get through this together.
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