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Tips for avoiding credit woes during and after a Colorado divorce

Moving through the end of a marriage can wreak havoc on the financial standing of both parties. At the end of this process, it is not uncommon for Colorado spouses to encounter a drop in their credit scores. In order to minimize the negative impact that divorce can have on credit scoring, it is necessary to take preventative steps and to address any issues as they arise. This is an area where an ounce of prevention really is worth a pound of cure.

For example, many divorcing spouses become so overwhelmed by the demands of the divorce process that they allow bills to go unpaid or make errors in managing debt. After all, divorce is usually accompanied by changes in one's living arrangements. One party often sets up house elsewhere, which can incur a wide range of expenses in the form of security deposits and so on. The other spouse will have to adjust to managing the household on his or her own, which is another source of financial strain. In this mix of new and old obligations, it can be easy to miss payments on existing accounts.

In general, a wise approach for both spouses is to take a hard look at what marital assets can be easily and profitably liquidated. Selling the family home, recreational vehicles or cashing out certain investments can provide both spouses with the means to pay off a portion of their existing debt. That can make it easier to balance the budget each month and can also improve one's credit score.

It might also be helpful to set up automatic payments on accounts that have a monthly bill. This can help ensure that all obligations are met on time each month, which can go a long way toward establishing and maintaining a good credit score. Colorado spouses should also be aware that no matter how careful they are, a drop in one's credit score is almost inevitable during and immediately after a divorce. The choices made during this time, however, can be instrumental in keeping that drop at a manageable level and in gaining ground back as quickly as possible.

Source: U.S. News & World Report, "5 Ways Divorce Affects Your Credit", Paul Sisolak, April 14, 2016

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