While you’re working on rebuilding your credit, one of the most important things that you can do is to pay all your bills on time. I know how tight money can get after divorce, and sometimes you need to juggle your bills to get them all paid.
To help you decide which bills to pay first, here’s a list to help you prioritize your payments:
- Rent or Mortgage Payments – You want to make sure that you have a roof over your head first of all.
- Car Loans – You especially want to keep current on your vehicle payments if you depend on your car to get you to work.
- Credit Cards – If you have credit cards which are being reported to the credit bureaus, you should strive to make your payments by the due date so that late payments won’t be counted against you.
- Utility and Phone Bills – Once again, make sure that you send in the minimum amount due to insure your services don’t get cut off.
- Insurance Premiums – I know it’s hard to continue paying for something that you see no immediate benefit from, but it’s important to not let your insurance go, especially your auto and health insurance.
- Secured Loans – Not paying a secured loan will result in the creditor repossessing the property securing the loan. Before defaulting, call the creditor to explain your situation and ask for an extension. This may cost you more in the long run, but can prevent a ding on your credit report.
- Unsecured debts – Hospital and doctor bills, attorney fees, and debts to other professionals are sometimes easiest to work with. The main thing is to be upfront about what you can pay and then make sure they are paid on a regular basis.
When you’re rebuilding your credit after divorce, you need to exercise restraint in building new debt and work to pay off your existing debts. Your debt ratio (debt owed/total credit available) accounts for 30% of your credit score. Also, one of the fastest ways to raise your credit scores is by paying down your debts.
