How to Rebuild Credit after a Divorce

Divorce can always destroy your credit, especially if you will suffer from asset losses and need to meet a demand of closing several debts as soon as possible. If you and your spouse run a small business, where you have built shared assets as well as shared credit, it will definitely be difficult for anyone of you to recuperate from a financial predicament.

It’s a good idea for you to start planning ahead while the divorce is being finalized. Work with your legal advisors on a plan of action; always consult with them first before you make any changes, especially when the divorce is not final. You should also take steps to identify yourself as a private debt holder immediately. The following is not legal advice but will give you an idea of some of the things to do when you are in the situation. 

Here are some useful tips when rebuilding credit after a divorce:

- Before establishing yourself as single, it is very important to make sure that all obtained debts during your marriage are paid in full. Stay vigilant if your spouse was ordered to pay a portion of these debts. You can get in touch with the lender to ensure that your spouse is complying with the court order about the payments. Make sure to make mortgage payments as well if your name is on the loan.

- Refinance mortgage loans. Terminate all joint loans you have with your spouse. Oftentimes, a mortgage is the most common joint debt you have with your spouse. You can sell the home and repay the debt. Just an important advice, always be very careful in going through such processes. However, if one of you will be staying in the home, problem may arise with refinancing because the home loan will be refinanced with a single borrower only.

- Establish financial independence. You need to establish financial independence once your loans have been settled. In this stage, you will be opening your own bank accounts as well as credit cards. Your credit may be too low for you to get considered for another mortgage loan but you can still rebuild it using the assets that you recovered. Proper separation of assets should be conducted. Specifically sorting out which assets were acquired during marriage.

Reestablishing the business credit can be quite difficult to execute, especially a divorce. However, proper negotiation, representation of a lawyers, and help from a business credit building company, will help you get back on track quickly.