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Don't Let A Divorce Ruin Your Credit Score

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Don't Let A Divorce Ruin Your Credit Score 

Various life events can affect a person's credit rating. Couples plagued by debt during and after a divorce should seek assistance from a non-profit credit counseling service. Knowledgeable financial counselors assess their financial situation and offer available debt management options. 

How Divorce Affects Credit Ratings 

One less income in the household greatly affects one's budget and the ability to pay monthly bills. Tough decisions must be made to pay only the most urgent or necessary debts such as utilities, daycare, or mortgage payments. Nonpayment or late payments are reported to the credit bureaus which affects one's score. 

Nonpayment of accounts may lead to liens placed on the home, garnished wages and daily calls from collection agencies. Low credit scores decrease the chance of being approved for a new home, apartment, credit cards, bank loan, cell phone, or vehicle. 

How To Take Control Of Your Finances 

It is important to be aware of all creditors and balances by requesting a free credit report from all three credit bureaus. Paying off accounts with the lowest balances allows those in debt to concentrate on other bills. If funds are not available but the amount due is not too high, making regular monthly payments on time will help whittle down that balance. Closing all joint accounts and refinancing also helps lower payments and future charges. 

Those with overwhelming debt in the thousands should seek help from a reputable credit counseling service. A consultation should be scheduled during the divorce process instead of waiting until after the proceedings are final. These financial experts assess the situation taking into consideration debts incurred and income to determine the best course of action. 

What Financial Counselors Can Do 

Debt management counselors offer options such as filing for bankruptcy or debt settlement. For the latter, this company negotiates with creditors to achieve lower interest rates for more affordable payments. Monthly payments are made to this company to disburse to these creditors by the due date. Debts can also be renegotiated and consolidated into one affordable payment which is made to the financial company each month. The amount paid is for a loan obtained to pay the consolidated amount. 

Deciding to hire a non-profit credit counseling service is a way to get back on track financially by aggressively taking control of one's finances. They also offer helpful tips and advice on budgeting, paying bills one time, and preventing overwhelming debt in the future.

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