How to Re-establish Good Credit After Divorce

Oftentimes, divorce goes hand-in-hand with exorbitant bills, bankruptcy or even foreclosure. If you’re facing divorce and worried about your credit, take heart; you can dig out of it. It simply means you have to re-establish yourself as a trustworthy borrower.

Here are five ways you can elevate your personal financial profile and get yourself back in good standing with the credit reporting agencies:

A credit card comes with a credit limit, which is the maximum amount of credit available to you. Bankruptcy specialists from Lenz Law Firm suggest you use your credit, but keep your balance at about 30 percent of what’s available.

If you can’t get approved for a regular credit card, apply for a high-interest (or “secured”) card. These are designed for people who have damaged credit. A secured card mandates that applicants secure the account’s limit with their own savings. Resolve to pay more than the minimum balance due every month, even if it’s only $5 to $10 more. Minimum payments make you look like you’re living on the financial edge again.

This pertains to a bigger-ticket purchases, such as a car, that are paid for with fixed monthly payments over an agreed-upon repayment schedule. DriveTime bad credit car loans are examples of an installment loan that, once satisfied, helps credit-challenged consumers immensely.

Although your past may not include a perfect, on-time payment history, you now have the opportunity to become a model borrower. Your payment history makes up 35 percent of your credit score, according to msn.com.

Consider setting up regular payments for your monthly bills online. This assures you’ll don’t overlook any more payments. Aim for a flawless on-time payment record by scheduling every payment at least one business day before it’s actually due. Many banks will charge a late fee if a credit card payment is not received by 10 a.m. on the due date.

Don’t close any open credit card accounts, but limit yourself to using only one. Closing accounts can hurt your credit profile, but not using open accounts has no impact on your standing, according to msn.com. Also, keep spending to a minimum; don’t be tempted by impulse purchases or anything else you don’t absolutely need. Paying your credit card bill on time is much easier when your balance is small.

Owning your own home again is possible after a divorce; sometimes, it just takes time. If you filed a Chapter 7 bankruptcy as part of the process, you’ll most likely you’ll have to wait four years to qualify for a conventional mortgage. According to bankrate.com, you must wait two years after a bankruptcy to get an FHA mortgage. If you’ve been involved in a foreclosure, typically you’ll have to wait up to seven years to obtain a new mortgage.

Learn more about your credit options at the Divorce Help and Hope Fair on September 27, 2013.