Saturday, 7 October 2017

Does Getting a Divorce Hurt Credit score?

Divorce touches your life in more than one way. While it mostly brings a lot of emotional stress and trauma to the couple involved, it certainly affects financial aspects of their life. Before seeking split of relationship, the couple should thus also consider financial implications of the decision on their credit score and credit worth.
Although divorce is not something that is stated on your credit report, but a legal separation from your spouse also divides household income, assets and liabilities. Thus a relationship split is likely to affect your credit score in a very significant manner.
Let’s understand how getting a divorce hurts your credit score and worth.
When your ex fails to pay out the bills
Many couples fail to follow divorce decree as far as financial obligations are concerned. Being a couple, it is likely that you two hold several joint credit accounts, and failure of meeting any of the open accounts by anyone of you would hurt the other person’s credit history and credit score as well. It would drop the credit score to be precise and it would become difficult to borrow loan with bad CIBIL score.
Later on even if you make the missed payment, that too would make a footprint in both the CIBIL reports.
Following a divorce, it is thus recommended to keep a strict vigil on the timely payment, even if the divorce decree makes the other person responsible for the payment. As long as the account is open, there is a risk of missed payment on time. In order to keep the last minute surprises away, you should take responsibility of timely payouts. You can set a monthly reminder on your mobile and contact your ex to politely ask them for the timely payment of the dues.
Irrespective of the issues between the two of you, the point of the matter is these accounts have your name attached and if they are not met on time, your rating will suffer.
In case your ex refuses to pay out an instalment, you can consider making the payment. You can always claim the refund later on in the court.
When you find yourself struggling for payments
Divorce cases could sometimes turn dirty and may involve a lot of expenses. If you were not the bread earner or support lesser salary than your previous lifestyle, you could be feeling stretched out after paying hefty bills to attorney for court proceedings.

In such pressing times, you may find it difficult to pay on time. In order to stay on track, many splurge credit card use, but that would eventually hurt your credit score too. For, rolling over balance on card could be a very costly mistake. It attracts very high interest rate.

Also, to keep your score robust you should not use more than 30 % of limit every month.

In face of lowered income source and additional expenses, you need to make a practical budget plan that helps you save enough every month. In the meantime, keep looking for additional ways to add to your income.

3. Try to find out an amicable solution to financial disorder in your life.
Although it could be easier said than done, you should try to have a peaceful interaction with your ex. The sooner you two figure out solution to your credit issues, the better it would be for you two. Do not forget to remove each other from joint accounts wherever possible. Many a times, the change in bank account details is not reported to Credit Bureau. So after you divide the accounts, report the changes to the credit agency. This will ensure that any mistreatment of accounts by your partner would not make an impact on your credit report.
Let’s check out some quick budget tips that will help you stay afloat.
1. Being on budget is not living miserably but precisely it suggests to cut down the less important expenses and save wherever possible. You need to first of all make list of all the expenses and income sources. Study the list and mark the expenses you can do without. This would be your first step to save for improving your credit situation.
2. Also, analyze if there are better avenues to general more income. This is meant to channelize your efforts in the right direction.

3. Make lists for shopping in advance. This will help you spend only on the required items.
4. Never make impulsive buying decision. Rather read reviews and reconsider several times before bringing a new gadget or device home.

5. Bring in simple lifestyle changes such as cutting down coffee, alcohol, cigarettes and other addictions. Use public transport more often. You can use bicycle or walk down to the nearer places. This will save you enough money and bring the good health at the same time.

All in all, leading a life after Divorce could be difficult in the beginning. But with right efforts you can build a good credit health within a couple of years.

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