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Repairing and Building Your Credit After Divorce

Posted on in Divorce Finances

Repairing and Building Your Credit After DivorceHaving good credit helps when you are responsible for supporting yourself after a divorce. It gives you the option of borrowing money to finance your immediate needs, such as purchasing a new home. Bad credit history or no credit history are obstacles to your financial stability but can be overcome with proper planning. Two of your goals during your divorce should be to protect or repair your credit and to work on building your individual credit.

Existing Credit

You need a current credit report to understand your financial situation, which you can purchase from a major credit bureau. Your current credit rating is likely based on:

  • Marital debts;
  • Business debts; and
  • Debts from before your marriage. 

Equitably dividing your marital debts is part of the divorce process. Marital debts are personal debts created during the marriage. With business debts, both spouses may be liable if they co-signed on the debt agreement or the business is not a limited liability company. Debts that predate a marriage are not shared during the divorce unless the spouse agreed to assume liability for the debt.

Repairing Credit

Many spouses will use marital assets to pay off their shared debts before they divorce. This can give them a fresh start on their credit and remove financial ties to each other. If immediately repaying your debts is not an option, you must decide how you will divide your debts with your spouse. Illinois requires you to split your debts fairly but not necessarily evenly. Factors you may consider include:

  • Your available income to make debt payments after your divorce;
  • The value of the nonmarital debts you are liable for; and
  • Whether the purpose of the debt was a greater benefit to one person.

Your division of debt is an agreement between you and your spouse on who will be responsible for paying each marital debt. It does not free you from legal liability for a debt if your former spouse fails to make payments. In such a situation, you could take your former spouse to court for breach of your divorce agreement.

Building Credit

Even if you had a good credit rating during your marriage, your individual credit rating may be lacking. You should have closed your joint credit accounts during your divorce. Now, you must build your individual credit by opening new accounts in your name only. You should keep your debt at a reasonable level that you are confident you can pay. Lenders want to see that you are able to make regular payments on your own.

Contact a Kane County Divorce Attorney

A strong credit rating after divorce starts with smart decisions during your divorce. A St. Charles, Illinois, divorce lawyer at Goostree Law Group can help you manage your marital debts. Schedule a free consultation by calling 630-584-4800.


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