Money / Financial Planning
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Going through a divorce can be a major transition, both personally and financially. While the act of divorce does not directly affect your credit score, it can change your financial obligations and, in turn, affect your credit. In today’s “Financially Savvy Female” column, we chat with Rachael Burns, CFP, financial planner and founder of True financial planning, on how women can make sure their divorce doesn’t ruin their credit.
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Stay up to date with your payments
“Divorce is a chaotic time, and it’s easy to forget to pay your credit card bill,” Burns said. “Misunderstandings are also common when one spouse assumes the other is taking care of the bill.”
It is important to be aware of any joint debt that you have with your ex-spouse, as you are also responsible for paying it off.
“Make sure you write up a credit report to identify any joint debts that you co-own and verify that payments are made,” Burns said.
Find out: simple and effective ways to prepare for a financially secure future
Don’t ignore the common debt
Along with this, it’s important to realize that joint debt doesn’t go away with divorce, so you can’t ignore it.
“You are still subject to a joint debt, even after your divorce is finalized,” Burns said. “A lot of people assume that after a divorce, they are automatically severed from any joint debt attributed to their ex in the divorce decree. However, you must update the property with each financial institution, otherwise you could still be held liable for the debt.
Tips: How to deal with the financial pressure of being the sole breadwinner
Actively work on building your credit if you’re starting from scratch
“If you haven’t established your own credit, your credit score can be affected when your ex gives up on your accounts,” Burns said. “This can happen if your ex was a part owner or an Approved Person because their credit history was contributing to yours. This doesn’t mean that you should keep them in your accounts, but it is something you should be aware of. Be sure to check your own credit and look for opportunities to build it up after a divorce. “
Opening a credit card, taking out a car loan, and updating payments can all be used to increase your credit.
GOBankingRates wants to empower women to take control of their finances. According to the latest statistics, women hold $ 72 billion in private wealth, but fewer women than men consider themselves to be in “good” or “excellent” financial position. Women are less likely to invest and are more likely to take on debt, and women still earn less than men overall. Our “Financially Savvy Woman” column will explore the reasons for these inequalities and suggest solutions to change them. We believe financial equality starts with financial literacy, which is why we provide tools and advice for women, by women, to take control of their money and help them live richer lives.
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