How a Credit Fix can Help Divorcees Purchase Homes

People who are going through a divorce likely have a lot to deal with beyond the simple facts of their finances, but in reality it can be difficult for those who deal with the process to find fiscal stability soon after it ends. Part of that may have to do with how they manage their credit during that troubling time, and those who might need a bit of a tune-up should certainly take the time to improve their credit scores.

A little bit of credit repair can go a long way for those who recently went through the divorce process in a number of ways. First, it will likely help them keep their finances under significantly more control than if they left whatever problems they now faced go unaddressed, but moreover it may also allow them to restart their lives wisely and safely by giving them access to new homes.

How it helps with home purchases
Taking the time to repair credit soon after a divorce will allow both spouses to get on their feet independent of one another for what might be the first time in years. While they may have long been linked by jointly held accounts that bore both of their names, it may now be time to dissolve those accounts, and instead try to reestablish independent standings with ratings based only on their own habits.

When a couple has jointly held accounts, the actions of either individual will affect the credit standings of both parties, so missed payments by one person, or overspending by the other, will necessarily bring down the scores for both. This, in turn, can be extremely problematic for those who just divorced because it can destabilize both parties' credit ratings and in doing so make their life more difficult once the process is over. This is especially true when buying a new home is a priority.

Today, financial institutions which issue mortgages to consumers have tighter restrictions than ever when it comes to approving people for such sizable lines of credit, largely because many are still worried about the threat of delinquency and default from borrowers following the housing meltdown a few years ago. As such, many are only allowing those with top-notch credit ratings to secure home loan financing. But that tightness of credit availability might lock out divorcees, who tend to see their ratings tumble over the course of the process.

As such, repairing credit is of the utmost importance to those who want to qualify for mortgages — and if they do, now is the time to obtain them, thanks to affordable prices and lower interest rates hovering at or near all-time records — and in some cases can take as little as a few months to sort out. For instance, taking the time to eliminate late payments and make a few months' worth of them on time and in full across all accounts will go a long way toward making up ground that might have been lost when a deadline slipped through the cracks during a lengthy divorce process. Further, those who were dealing with sizable debts in the immediate wake of proceedings might want to pay them down by as much as possible, and aim to have balances that are no more than 30 percent of their total overall credit limits. These two considerations will help to buoy what might have been flagging credit ratings for many divorcees and put them in the best possible position to not only qualify for a mortgage, but get the top terms available to them as well.

Why credit repair can help in general
But qualifying for a mortgage isn't the only perk of credit repair after divorce. It will also help with accounts that are currently more readily available, such as credit cards and auto loans, because it will help to ensure that they have access to the best possible terms — such as low interest rates and fewer or no fees — on these accounts. That, in turn, will help to make their transition to single life far more affordable and perhaps give them more overall financial security as they start this new chapter.

Many divorcing people may also find it helpful to take the time to order copies of their credit reports, and check these documents over closely. This can be wise because many of these documents may now contain unfair markings which can unfairly drag one's scores down significantly. Fortunately, if any such entries are uncovered, it can be helpful to work with a credit repair law firm, which may be able to help correct these issues as quickly and easily as possible, and return borrowers' credit standings to where they deserve to be.