How to Keep Divorce From Damaging Your Credit in Illinois

 Posted on July 31, 2023 in Divorce Finances

Going through a divorce in Illinois can negatively impact your credit if you are not careful. Following key steps can help minimize damage and keep your credit score healthy during a divorce.

Review All Joint Accounts

Pull your credit reports and review all joint accounts with your spouse, such as:

• Mortgages
• Auto loans
• Credit cards
• HELOCs/home equity loans

Look for any missed or late payments that may already be affecting your score. Also, assess available credit limits and balances.

Create New Credit in Your Name

Open a new credit card account and/or arrange a 12-month personal loan in only your name. Making on-time payments builds your individual credit history. Just do not take on more debt than you can handle.

Divide Joint Credit Card Debt

If you have jointly held credit card balances, ask the issuer to split them into two individual accounts, with each spouse responsible for their portion. This keeps future charges or missed payments from affecting you.

Do Not Close Old Joint Accounts

While opening new credit is advisable, avoid closing decades-old joint accounts as this reduces your total available credit limit and can hurt your credit score. Keep old accounts open but refrain from using them.

Negotiate Debt Division

Divide joint debt obligations like car loans and mortgages in the divorce settlement agreement. Transferring debt to one spouse removes your liability for future missed payments.

Seek a Credit Limit Increase

Consider requesting higher limits on the credit cards you do keep to keep credit-utilization ratios lower. This helps scores when used responsibly.

Stay Current on Bills

Be meticulous about paying all monthly bills on time, including utilities, cell phone service, rent, child support payments, and any other obligations. Missed payments get reported to credit bureaus.

Check Reports After Finalization

Once the divorce is finalized, check your credit reports again. Ensure any joint accounts report the account split accurately. Dispute any errors.

With attentive credit management, divorce does not have to severely damage your credit standing. Maintaining good credit protects your finances as you start fresh.

Contact an Illinois Family Law Attorney

If you are considering a divorce, contact an Aurora family divorce lawyer. An attorney can help you understand the possible impacts on your credit and provide helpful tips for maintaining a healthy score after the divorce is finalized. Call The Law Office of Matthew M. Williams, P.C. at 630-409-8184 to get started on the right path.

Source: https://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2086&ChapterID=59