Especially if you have been married to your spouse for so long, you may have grown accustomed to pooling your assets and debts and sharing your financial responsibilities with them equally. But obviously, all of this must change once a divorce petition is filed. One of the main issues addressed in your divorce proceedings, whether through mediation, arbitration, or litigation, is how to divide your marital assets and debts. Inevitably, moving around these assets and debts may result in a fluctuating credit score. Usually, this fluctuation ends in a downturn. Please read on to discover how to avoid hurting your credit score tremendously and how a seasoned Bergen County divorce attorney at McNerney & McAuliffe can help you take the right steps toward protecting it.
How does a divorce case affect my and my spouse’s credit?
Getting a divorce from your spouse may affect both of your credit scores in indirect ways that you may not initially realize. This is because, for example, you may go from having two sources of income streaming into your household to just yours. On top of this, you may have been ordered to child support and spousal support payments that further decrease your monthly net income. Under these conditions, you may struggle to keep up with paying off the debts that your spouse previously helped you with. This may force you to take a new loan for additional aid, which subsequently has your credit score take a hit.
Your spouse may similarly find it challenging to adjust to living off of one income stream. With this, they may default on one of your joint debts you two are equally responsible for paying off. In default, their default may be disclosed on your personal credit report. This is because creditors and debt collectors are not necessarily obligated to honor and observe your divorce decree.
How do I avoid hurting my credit score when getting a divorce?
While you may be unable to avoid your credit score getting lowered as a direct result of your divorce case, there may be initiatives you may take to build it up in the aftermath. For one, your finances may fluctuate as your responsibilities shift in a divorce. So during this time of fluctuation, you may make it a point to keep your credit utilization consistent. That is, it is in your best interest to keep your credit utilization ratio under 30 percent for every monthly billing cycle. This may require you to create a monthly budgeting plan and temporarily sacrifice certain unnecessary expenses.
Secondly, financial independence may be daunting, but freeing once achieved. For this, you may want to build your own credit history. This is especially important if much of your adult life was spent as an authorized user of your spouse’s credit cards, your only bank accounts were owned jointly, and your only loans were taken out jointly. The first step is to apply for a credit card in your own name and pay it off with the funds you place in your individual checking account. Eventually, you may produce enough history and credibility to apply for a loan alone.
Before you take any further initiative with your divorce, we urge you to consult a competent Bergen County family law attorney. Most definitely, the team at McNerney & McAuliffe is eager to work with you.
