Building Credit After Divorce

Married people frequently take out credit together. However, as part of the divorce, you may have closed down or been removed from joint accounts. If you no longer have credit cards or other types of credit, it is a good idea to establish your own credit history. Do you plan on getting a mortgage or car loan in the future? In order to get one, especially at a low interest rate, you generally need to have a good credit score. Having a good credit score can also make it easier to rent an apartment and get low rates on insurance. You can’t have a good credit score unless you have credit that you use responsibly.

In general, a credit card is the easiest type of credit to get. However, if you currently have no or a poor credit history, even getting a regular credit card could be difficult. Luckily, a regular credit card is not your only option. You can also apply for a secured credit card. A secured credit card requires you to put down a cash deposit, which the creditor can keep if you do not make your payments. (You get the deposit back otherwise.) The credit limit is usually low, and the fees can be high, but after a year or two of on-time payments, you may be able to convert it to a regular credit card. Another option is a retail card, which can only be used at the store that issued it.

Once you have credit, it is very important to make your payments on-time and keep your balances low. If you make your payments late and/or have a lot of debt, you will only be building a negative credit history. Collection accounts, repossessions, foreclosures, and bankruptcy are especially damaging to your credit score.

Another wise financial move is to check your credit report regularly. Many credit reports contain errors, and if yours does, you will want to know so you can have it corrected. Checking your credit report can also allow you to spot identity theft. Unfortunately, it is not unheard of for people to take out credit in their ex-spouse’s name. (Of course, a stranger could steal your identity, too.)

As a member of Hanscom Federal Credit Union, you can access your credit score and report at no cost. We can meet with you, explain the report in detail, and offer you tips to improve your score. Click here to learn more about what happens at a credit score review.