If you and your spouse are thinking about divorce, your credit score is probably the last thing on your mind. But when it comes down to brass tacks, the most lasting impact a divorce can have is on your long-term financial situation – and sometimes it can be critical to fight those emotional instincts and focus instead on self-preservation for the long run.
With that in mind, how can divorce impact your credit score? There are a few big things you need to be aware of and in some cases even prepare yourself to avoid financial pitfalls.
The first and most obvious financial factor when it comes to getting a divorce is… the cost of getting a divorce. Hiring an ace attorney and a team of specialists can go a long way toward protecting your rights and advocating for your future during divorce proceedings; however, experience and expertise come at a price.
Whether you have an amicable settlement at the negotiating table, or a protracted legal battle, it’s important to stay on top of your legal bills. And if you charge these expenses to a credit card, that can take a bite out of your available credit line and leave you in a difficult spot if you find yourself unable to pay it off. That’s why it can be critical to get solid financial advice early on, so that you can prepare yourself for the road ahead.
Forgetting to Make Payments
Again, let’s face it – the last thing on your mind when it comes to a divorce is probably money. Instead, you’re focusing on the well-being of your kids, your family and friends, and maybe even your spouse. So when the mail comes, it just starts to get stacked up – or maybe even gets thrown right in the trash.
Falling into the habit of neglecting your bills and obligations is a dangerous road to go down. Missing mortgage payments, forgetting to mail a check to the utility company, or ignoring the insurance bill can start a snowball affect that can be extremely detrimental to your financial future – not to mention the much more challenging situation you’ll face if your electricity is shut off or your car is repossessed.
If you need help staying on top of the day-to-day responsibilities, it’s okay to ask for it. Tapping a trusted family member or friend to help you get – and stay – organized can make a big difference in your mental state, and help you avoid bigger money problems.
Not all marriages end amicably, and it’s certainly not unheard of for a vengeful spouse to take advantage of joint funds (or joint credit) to go on a spending spree. Among other things, it’s crucial to revoke authorizations for your spouse to access your credit cards and bank accounts as soon as possible. With the help of your divorce attorney, you can work out an agreement to handle joint debt – but the important thing now is to take care of your separate finances as soon as possible.
While you deal with this process, it’s important to keep an eye on your bank statements and credit report, to make sure that your finances are completely within your control. Being vigilant and proactive about your money can help make sure that your financial future isn’t just another a casualty of your divorce.