9 Steps for Protecting Your Credit While Going Through a Divorce

Divorce presents many financial challenges. One that is often overlooked is to remember to protect your credit rating. Here are some essential steps you should take to safeguard your financial well-being:

Protecting Your Credit
  1. Know Your Credit Report: Start by running your credit report. Understanding what is on your credit report is the first step toward protecting and potentially improving your credit rating. Take note of all open credit accounts and their history to get a full picture of your financial situation.
  2. Close Joint Accounts: If you have joint credit accounts with your spouse, you should remove your name from any loan or account associated with assets you won’t be receiving. This might involve refinancing or loan assumption to ensure you are not held liable for debts you are not responsible for. Be sure to communicate clearly about account closures in advance so no one is caught off guard.
  3. Understand Mortgage Refinancing and Loan Assumption: When it comes to mortgages, refinancing or loan assumption are common options. Your name should be removed from the mortgage if you are not keeping the home to avoid future financial liabilities.
  4. Handle Other Debts Wisely: Auto loans, personal loans, and credit cards also need to be addressed. Close joint accounts whenever possible to prevent future liabilities and protect your credit rating.
  5. Consider the Impact of Closing and Opening New Accounts: Be mindful of the length of your credit history. Closing older accounts can potentially harm your credit score more than closing newer accounts. Balance the need to protect your credit score with the age of the account when making decisions. If needed, consider opening individual credit accounts to establish and grow your credit score.
  6. Monitor Your Credit Regularly: Keep a close eye on your credit report before, during, and after the divorce process. Watch for any unauthorized activity or errors that could negatively impact your credit rating.
  7. Prioritize Financial Stability: Focus on maintaining financial stability by paying bills on time, avoiding unnecessary debt, and sticking to a budget. This will help minimize financial strain during the transition period.
  8. Seek Professional Advice if Needed: If you’re unsure about handling certain financial aspects of your divorce, consider seeking advice from an experienced financial planner. They can provide personalized guidance based on your situation.
  9. Plan for the Future: Keep your long-term financial goals in mind as you navigate through the divorce process. Develop a plan for improve your credit if necessary and achieving financial independence after the divorce.

In a divorce it is important to safeguard your credit in order to protect your financial future. Your credit score affects not just your ability to get lower interest rates on loans for homes or cars, but it can also be reviewed by potential employers or landlords when you’re looking for a job or a new place to live.

Contact Financial Harmony

For more information regarding financial planning while going through a divorce, contact Kristine Rushing at (833) 340-2305 to schedule a free consultation. Financial Harmony is located at 7700 Irvine Center Drive, Irvine, CA 92618.