Approximately 80% of couples in Canada end up in divorce. Going through divorce or separation is not easy. It is stressful for both parties, with all the proceedings and aftermath of the divorce.
As a couple, it is expected that you have shared accounts with your spouse and when you go through a divorce, you have to fix the joint accounts that you have with your ex-spouse.
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How will you protect your credit score after divorce?
1. Close joint account immediately
During a marriage, it is common to have at least one joint account as a partner. It can be used to pay bills and other house expenses. If you happen to get a divorce, close those accounts immediately.
You are equally responsible for the debt, no matter how it is distributed in the divorce. It is better to be safe than sorry later. If your ex-spouse ever uses the account and has a default, your credit score will most likely be affected.
2. Check your credit report regularly
Checking your credit report to check on information errors is essential to keep your credit score in check.
After divorce, check if there are still problems and errors from your joint accounts when you are still married. Issues like this might occur even after divorce, so closing the kind of accounts you had with your partner is necessary.
3. Put a freeze on your credit files
If you have a bitter ex-spouse, it will be practical to temporarily put your credit files on freeze. It prevents your ex-spouse from using your social security number and your name to open multiple accounts.
This kind of activity will damage your credit score gravely. If ever this happens to you, report it for identity theft and have them removed from your account.
4. Notify your creditors
Send a mail to your creditors stating that you had a divorce and you won’t be held accountable for the debts that will be accumulated after the said date on the mail. You must notify your creditors because who wants to keep you responsible for the debts you didn’t make, right?
5. Keep your address up to date
If you move out of the marital house, you have to make sure that you update your address. If not, things like your credit reports will not get into you. Your billings will be addressed at your new residence, which will prevent you from missing your payments. If you have any missed payments, that could affect your credit score.
6. Don’t fight for the house
Who will keep the house is one of the debates that ex-partners go through when going on a divorce. Of course, you already grew fond of the house or have been emotionally attached to it. But think twice before fighting for the home.
If you want to fight for the house, make sure that you afford the mortgage that comes with it. A home can be more of a liability than an asset if you can’t afford it and you still want to keep the house.
7. Avoid revenge shopping
If you are freshly separated, you may want to think of a whole makeover and go on a shopping spree because why not? You’re single, right? But is it practical?
No, it’s not. Your credit score is more than those revenge shopping. Because maxing out your credit limit will hurt your credit score, and it will take years to repair. So credit score more than anything.
Can a divorce affect your credit?
Filing for divorce or the procedure will not affect your credit score.
If you have separate accounts with your spouse, you won’t have problems with your credit score. But if you have joint statements that are paying your credit card or mortgage and the other party failed to pay their part. That’s when your credit score will be affected.
If you are an authorized user on any account and your income changes, your credit limit may be impacted.
The debt-to-credit utilization ratio is the amount of credit you use compared to the total amount available.
For instance, you have your ex-spouse as an authorized user on one of your credit cards and you have them removed. That will leave you with a single income, and your credit limit might have impacted because it is lower than when you have two.
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Divorce is really devastating in any aspect of your body. Mind, body, and even financially. However, that is not a reason to let your credit drain.
It would help if you still took care of your credit score while moving forward. It’s hard, but you can’t do anything about it. It is your choice, to begin with.
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