Changes to your finances are an inevitable outcome of a divorce. Your credit could feel the push and pull of fluctuating income and financial responsibility.
A proactive approach to guarding your credit may minimize the repercussions of your split on your financial stability and your future.
Analyze your credit
Depending on the types of assets and debts you have, some of your accounts will be directly linked to your credit. Divorcing without knowing which accounts your name is on could increase the risks of damage to your credit, particularly if your partner has a history of overspending or not paying debts on time.
If you separate and are unaware that your spouse has continued to rack up debt in places linked to your name, your credit could take a big hit. According to CNBC, one study revealed that nearly 40% of divorcees saw their credit score drop by more than 50 points after their split.
Close joint accounts
Immediately close joint accounts. Open a personal bank account. Negotiate with your partner about who will oversee various financial responsibilities during the divorce. If you have credit cards, remove your spouse as an authorized user to prevent unauthorized charges under your name.
Manage finances responsibly
Refigure your budget immediately. Refrain from overspending and look for ways to cut back on your expenses. Find creative ways to maximize your savings. Consider alternative forms of saving that could build compound interest. Recognize that your well-being in the future rests solely on your ability to make responsible decisions right now.
Your diligence in proactively protecting your finances can help you fortify your credit even during this volatile time. With a reliable credit score, you can maintain good financial standing with creditors and lenders.
