Are you recently divorced or divorced for a while? Rebuilding or continuing your credit after divorce may not seem like a priority right now, especially if you’re still reeling from the end of your marriage. If you eventually want to get credit cards in your name, finance a car or home, and even start a new job, you need to make sure you have a good CREDIT SCORE. Because? Your credit score will affect your ability to get a loan, rent a house, or get hired for that job. You should have the highest possible credit score for where you are today.
Here are my top credit score repair tips before and after divorce:
o Cancel all joint credit card accounts from your marriage. This will protect her credit history in case your ex-husband decides to use them. If the debts are in both names, it will remain a liability to you until they are paid.
o All accounts you had while using your husband’s last name must be changed to the name you are using now. This will help rebuild her credit score.
o Begin to enter into a personal relationship with a bank and banker of your choice with whom you did not do business while married. Open a new account or maybe a small CD.
o Quickly set up accounts in your name, so you can start rebuilding your credit.
These are exactly what I use when training my private credit score clients.
Step 1.
What is your credit score today?
Request a copy of your credit reports. Be sure to get a copy of the top 3 credit bureau providers, as the information varies widely. Make sure that all information about YOU is correct and that the division of debts is accurately reflected.
If there are errors on your report, you may want to contact a reputable credit repair company to help you with this, as it can be challenging at times. If you want to do it yourself, contact all creditors and bureaus and provide them with the proof they ask for. After completing all fixes and updates, request your report again in 3 months to make sure everything is reported correctly and nothing has reappeared. (Happens frequently)
Step 2.
Do you have your own credit score? If not, establish credit in your own name.
If you do great! Continue to build a good credit score. You can follow my advice below.
If you don’t have an established credit score in your own name, start rebuilding today. Now is the time to start.
You may not qualify for a major credit card right now, that’s okay. You may want to consider applying for a store credit card or gas credit card. If you are approved, charge a small monthly amount and pay in full on time. You are now starting to build a great credit score.
Another way to start building an outstanding credit score in your own name is to apply for a secured credit card or take out a small loan at a bank and use an asset or your savings as collateral. Same goes here, make your payments on time every month and don’t carry any balances in your rebuild phase. You’ll start to build a consistent credit history, which will increase your credit score and make it easier to get approved for unsecured credit in the future.
Step 3.
Make your payments on time
Your excellent credit score is based on the longevity of timely payments, so the longer you pay your bills on time, the higher your score will be. Money can be tight after the divorce or at any time, and sometimes you’ll have to juggle paying your bills.
The following are my personal recommendations for the order in which you should pay your bills:
1. Mortgage or rent payments
This is one of the most important elements in the scoring algorithm. So make sure you make these payments on time or your credit score will take a big hit.
2. Car, motorcycle, boat, etc. loans
If you depend on your car for various activities, keep these payments current. If not, you run the risk of being seized.
3. Credit cards
You want to pay them off in full or make the minimum payment before the due date. Credit card accounts are now (in many cases) reported after they are 5 days late. This will also keep your interest rates from going up and help you avoid late fees.
4. Utility bills
You will want to pay the minimum required to ensure that your utilities continue. Reconsider what utilities you have. If you need to cut back, landlines and cable phones are always an option to cut back on.
5. Auto and health insurance premiums
If you have a car, many states require auto insurance, this is one bill you need to make sure is paid. With health insurance, you may want to increase your deductible to lower your monthly premium.
6. Secured debts
Watch out for these. If they are not paid, the creditor can recover the asset that was used to guarantee the loan. If you absolutely cannot make the payment, you need to see if you can give the asset to the creditor without hurting your credit.
7. Unsecured debts
These include all other debts. Like, to your lawyer, doctor, hospital and any other service provider or professional. Most of the time, as long as you pay a small monthly amount, these accounts will be fine. If you absolutely can’t make that month’s payment, contact them and they will usually work something out with you.
Stage 4.
pay your dues
A high debt ratio hurts your credit score. The most effective way to improve your score is to not carry a balance or pay off your debt.