Divorce is a complicated process with a lot of moving parts, and it can be easy to get focused on the wrong details. Financial advisors say that one of the most commonly overlooked things in divorce is the issue of credit.
How can credit become a major concern? Consider the following.
The absence of credit
If you haven’t acquired credit in your own name during your marriage, that can put you at a serious disadvantage once your divorce is over as you try to rebuild. It can affect your ability to finance a vehicle, obtain housing and even meet important needs.
The inability to refinance
If you want to keep the family home, you’ll likely be required to refinance the mortgage in your own name so that your spouse no longer has any financial liability for it. If your credit is poor or you have no credit, obtaining a mortgage on your own may be either extremely expensive or impossible.
The overload of debt
Just like marital assets, marital debts have to be divided in a divorce – and you could end up saddled with more than you anticipate. That can make it harder to obtain new credit and even lead to missed payments, a much lower credit score and further financial instability.
Financial advisors generally recommend that you pull your credit records as soon as you begin contemplating divorce so that you can take stock of your situation and take some proactive measures. The sooner you address credit issues in your divorce process and help mitigate financial problems you might encounter. Learning more about the best way to protect your credit – and your future – can ease the pinch.