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Protecting and rebuilding your credit score after a divorce

For many divorcing couples, their credit scores are far down the list of things they're concerned about. However, if you're not careful, divorce can wreak havoc on that important indicator of your financial health at a time when good credit may be particularly crucial. Many newly-divorced people are looking for a new home, job and/or car. A low credit score can derail all of those things.

The primary causes of a post-divorce credit score plunge are lower household income combined with higher expenses, a spouse who doesn't keep up with joint debt and identity theft. In some cases, people are forced into bankruptcy because of the actions of their former spouse.

The good news is that you can recover from a damaged credit score. However, it takes time and commitment. Newer activity has a greater impact on your score than older activity, so you can turn it around by taking some important steps.

Start by knowing that your score is and what's impacting it. Get a copy of your credit report from all of the reporting agencies.

If there are joint accounts, you can take action to get your name off of them, freeze them and/or pay them off. You should consult with your family law attorney before doing anything with joint accounts, particularly if they're included in the divorce agreement. Your attorney may also be able to work to get your spouse to help pay off any remaining joint debt. You may need to place a fraud alert on your reports to alert you if your ex is using your information illegally to obtain credit.

If you don't have credit in your own name, get it. Even if the only type of credit card you can get is a secured one, at least it will help you build a good credit history in your own name if you handle it correctly.

Pay your bills on time. This goes for all bills -- not just credit cards and loans.

If you need to pay off some debt to raise your credit score, you may want to consider a loan (not a withdrawal) against your retirement plan or perhaps from family.

You also may benefit from consulting with a financial planner with experience helping people recover financially after a divorce. Your family law attorney can likely recommend someone who can help you build or re-build your credit score.

Source: Forbes, "Getting Divorced? Do Not Ignore Your Credit Score (and How to Rebuild it if You Did)," Emma Johnson, April. 08, 2015

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Commandments of Family Law

  1. The only truth your children need to know is that you both love them unconditionally, and that this isn't their fault.
  2. Take the high road — everyone wins when you do what's best for your kids.
  3. Negotiate but don't capitulate — if you are being pushed toward something detrimental for your children, stand your ground.
  4. You can only control yourself and how you respond. Don't engage.
  5. Do set up rules and responsibilities. Kids feel better when routine is continued.
  6. You are still their parent — don't be afraid to be one.
  7. Disneyland is in California, not in your home. Don't set up unreasonable expectations.
  8. It is not their job to take care of you. Repeat that to them. Often.
  9. Yelling is for sports — not court. Good lawyers strongly advocate without being disrespectful to opposing parties.
  10. Fair is a place you go to get cheese curds. Aside from that, nothing in life is fair.

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